Lululemon shares plummet as tariff costs, rivals threaten profit outlook

Core Viewpoint - Lululemon has cut its profit forecast for the year due to higher costs from US tariffs and weak demand for its new products, leading to a significant drop in its stock price [1][6]. Group 1: Financial Performance - The company now expects annual profit between $14.58 and $14.78 per share, down from previous expectations of $14.95 to $15.15 [6]. - Lululemon's revenue forecast for the second quarter is between $2.54 billion and $2.56 billion, which aligns with market expectations [8]. Group 2: Market Challenges - The company is facing lower store traffic in the Americas, attributed to economic uncertainty, inflation, lower consumer confidence, and changes in discretionary spending [1][3]. - Competitors like Alo Yoga and Vuori are gaining traction, making it difficult for Lululemon to boost sales despite new product offerings [3][8]. Group 3: Strategic Responses - Lululemon plans to implement modest price increases on a small portion of its product assortment and will negotiate with vendors to cut costs [4]. - In 2024, 40% of Lululemon's products were manufactured in Vietnam, and 28% of its fabrics were sourced from mainland China, indicating a diversification strategy in sourcing [4].