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Athleisure maker Lululemon Athletica reported slowing visitors in its tons of of US shops as worries over the financial system immediate customers to take a extra cautious take a look at its $100 yoga pants.
The Canadian firm reported report income of $10.6bn for 2024, an increase of 10 per cent 12 months on 12 months, as new shops opened and gross sales at current shops grew general. Annual web revenue grew by 17 per cent to $1.8bn, additionally a brand new excessive.
However the figures additionally revealed weak spot in its largest market of the US, whose 374 shops promote high-end Lululemon exercise gear — and the place client sentiment has been shaken by persistently excessive inflation and President Donald Trump’s tariffs on buying and selling companions.
Identical-store gross sales within the Americas division have been unchanged within the fourth quarter of 2024 and decreased by 1 per cent for the complete 12 months. Visitors to US shops has been declining within the firm’s first quarter, which started in early February, executives stated.
“We started this year with several compelling new product launches, but we also believe the dynamic macro environment has contributed to a more cautious consumer,” Calvin McDonald, chief govt, instructed analysts. Citing a survey Lululemon carried out earlier this month, he added that “consumers are spending less due to increased concerns about inflation and the economy”.
Shares of Lululemon fell by 10 per cent in after-hours buying and selling in New York.
A sequence of financial knowledge releases, surveys and company bulletins have pointed to client retrenchment as Trump unleashes tariffs on an array of imports and international locations.
A US client expectations index revealed by the Convention Board think-tank this week fell to the bottom degree in a dozen years and one which normally alerts a recession. Nike, the shoe and athletic attire firm that may be a competitor of Lululemon, final week forecast an sudden drop in quarterly income.
Lululemon chief monetary officer Meghan Frank instructed analysts its gross revenue margin was prone to decline by 0.6 proportion factors this 12 months in contrast with 2024, partly on account of “the impact of increased tariffs related to China and Mexico”. Each international locations have Lululemon shops and are topic to new US tariffs.
In a regulatory submitting, Lululemon stated most of its merchandise have been manufactured in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh.
If the tariffs increase — as Trump goals to do subsequent week — “we’ll continue to look across our cost structure as well as to pricing, should the environment change”, Frank stated.
