Lululemon stock tumbles as weak outlook overshadows solid Q4

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 early Friday, as a softer outlook overshadowed a fourth quarter that exceeded expectations. This was reported after the bell on Thursday.

Lululemon reported earnings per share of $6.14 on revenue of $3.61 Billion for the quarter ending February 2. Visible Alpha estimates had analysts predicting EPS of $5.88 for $3.58 billion sales. The results exceeded expectations despite comparable sales falling short by 3%.

Lululemon expects a first-quarter earnings per share (EPS) of $2.53 to 2.58 on revenue between $2.34 billion and $2.36 billion. It also expects a full-year earnings per share of $14.95 to $15.15, on revenue between $11.15 billion and $11.3 billion. All four metrics were lower than 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’s shares were down 11% in the morning on Friday, and they are on track to open at their lowest level since November 2024.

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.