lululemon(US:LULU) Zhi Tong Cai Jing·2025-06-06 00:49Core Viewpoint - Lululemon Athletica's Q1 2025 earnings report and lowered full-year profit guidance have raised concerns about intense competition and tariff policies undermining the company's growth ambitions, leading to a significant stock drop of 23% post-announcement [1] Financial Performance - Q1 net revenue increased by 7% year-over-year to $2.37 billion, slightly above analyst expectations of $2.36 billion - Comparable sales growth was 1%, below the analyst average expectation of 2.8% - Revenue growth in the Americas was 3%, with comparable sales down 2%; international market revenue grew by 19%, with comparable sales up 6% [1] - Gross profit rose by 8% to $1.383 billion, with a gross margin of 58.3%, up from 57.7% year-over-year - Operating profit was $439 million, a 1% increase year-over-year, but the operating margin decreased by 110 basis points to 18.5% - Net profit was $314 million, down from $321 million year-over-year, with diluted earnings per share of $2.60, exceeding analyst expectations of $2.58 [1] Future Outlook - For Q2, Lululemon expects revenue between $2.54 billion and $2.56 billion, with analyst expectations at $2.56 billion; EPS is projected between $2.85 and $2.90, while analysts expect $3.29 [1] - For the full year 2025, revenue is expected to be between $11.15 billion and $11.3 billion, with analyst expectations at $11.24 billion; EPS is projected between $14.58 and $14.78, down from previous guidance of $14.95 to $15.15, with analyst expectations at $14.89 [2] Competitive Landscape and Challenges - The CEO expressed dissatisfaction with growth in the U.S. market, noting that consumers are more cautious and selective in their purchasing decisions, which has been a recurring theme in previous reports [2] - The company plans to strategically raise prices on select products to mitigate tariff impacts, with adjustments starting in the latter half of the current quarter and extending into Q3 [3] - Lululemon is attempting to boost demand by entering new product categories and expanding into running, tennis, and golf, while facing changing fashion trends favoring looser styles over its signature tight yoga pants [3][4] Product Performance - The company is satisfied with the early performance of new products, including high-waisted pants and athletic shorts; however, analysts note that tariff pressures and weak store traffic overshadow any positive feedback from new offerings [4]