Lululemon stocks lead S&P decliners after CEO says, ‘Consumers Spending Less.’

Takeaways

• Lululemon shares tumbled Friday after the apparel maker's projections for the first quarter and 2025 disappointed.
• The retailer’s fourth-quarter earnings were better than expected, with an increase year-over-year.
• Executives say that consumers are cautious about their spending and this is affecting the traffic in its stores.

The shares of apparel retailer Lululemon Athletica fell Friday after a disappointing outlook overshadowed a fourth quarter that exceeded expectations. This was announced Thursday, just after the bell.

Lululemon’s earnings for the quarter ended February 2 were $6.14 per share, on revenues of $3.61 billion. Visible Alpha’s estimates showed that analysts had predicted EPS of $6.14 on $3.61 billion in sales. The results were above expectations despite the fact that comparable store sales fell short of estimates by 3%.

Lululemon has stated that it expects to earn a profit per share of between $2.53 and $2.58 in the first quarter on revenue ranging from $2.34 to $2.36billion, and a full year EPS of between $14.95 and $15.15 on revenue ranging from $11.15 to $11.3billion. All four metrics fell below consensus expectations.

"Consumers are spending less due to increased concerns about inflation and the economy," Lululemon CEO Calvin McDonald said in Thursday's earnings call, according to an AlphaSense transcript. "This is manifesting itself into slower traffic across the industry in the US in quarter one, which we are experiencing in our business as well."

Lululemon shares were down around 14% in recent trading, leading decliners in the S&P 500. Earlier in the day, they had reached $287.50 – their lowest point since October last year.

Analysts cut price targets for Lululemon

Analysts from JPMorgan and UBS on Friday each cut their price targets for Lululemon stock to $391 with an "overweight" rating and $335 with a "neutral" rating, respectively.

UBS analysts said that Lululemon "looks decreasingly capable" of delivering on previously projected growth rates of double-digit EPS growth per year. JPM analysts said that executives noted a downward trend in traffic across the industry entering the first quarter, and that tariffs and currency exchange rates could hurt the company's profit margins in 2025.

UPDATE—This article has been updated with the latest share price information.