Lululemon CEO: We need to get back to innovating & creating in key categories

Financial Performance & Guidance - Lululemon's earnings guidance came in well below estimates, marking the second guidance cut this year [1][2] - The company attributes the updated guidance to the impact of tariffs and the unexpected removal of the de minimis exception [2][3] Impact of Tariffs & De Minimis - The removal of the de minimis exception significantly impacted Lululemon, as two-thirds of online orders (majority under $800) were previously shipped from a Canadian facility without tariffs [4] - Lululemon is adjusting its distribution network in response to tariffs, a change considered a paradigm shift for the industry [4][5] - The company is exploring vendor partnerships for cost reductions, internal cost reduction measures, and strategic pricing adjustments to mitigate tariff impacts [5][6] - Some price increases on apparel are expected due to tariffs, implemented strategically based on elasticity modeling [6] North American Market Performance - Growth has stalled in the key North American market, particularly in the US [9] - Underperformance in the US is attributed to product issues, specifically in lounge and social categories, due to a lack of newness and innovation in core franchises [10][14] - Lululemon acknowledges the need to update product assortment, color, and style to better engage guests [10] Competition & Market Share - While consumer spending is down in apparel, activewear, and premium activewear, Lululemon claims to have gained market share in the premium activewear category in Q2 [13] - The company acknowledges competition from brands like Alo Yoga and Viori but believes it can win by delivering innovation [13][14] Future Strategy & Innovation - Lululemon hired a new lead creative director a year ago to energize the product playbook and drive innovation [15] - The company anticipates a shift towards more new styles, increasing from an average of 23% of the mix to 35% next year, expecting a turnaround [16] - Lululemon is confident in new styles and expects them to resonate with guests, with exciting new products coming next year [18]