Lululemon Stock Tumbles After Outlook Disappoints—Tariffs, Markdowns Flagged By Analysts

Shares of Lululemon Athletica Inc. LULU were trading sharply lower on Friday despite the company’s upbeat first-quarter results on Thursday.

The announcement came amid an exciting earnings season. Here are some key analyst takeaways.

Truist Securities On Lululemon Athletica

Analyst Joseph Civello reaffirmed a Buy rating, while reducing the price target from $297 to $290.

Lululemon Athletica's stock came under significant pressure due to management's disappointing outlook for the second quarter and a lowering of their full-year guidance, Civello said in a note. Although the company reiterated its 2025 sales guidance of $11.15 billion-$11.3 billion, it cut its earnings outlook by 2.5% to a range of $14.58-$14.78 per share, versus its previous projection of $14.95-$15.15 per share, he added.

The softer earning outlook reflects a gross margin contraction of around 110 basis points (bps), compared to 60bps previously, the analyst stated. This not only incorporates tariff-related headwinds, "but also includes modestly more markdown pressure than the company was contemplating before," he further wrote.

BofA Securities On Lululemon Athletica

Analyst Lorraine Hutchinson reiterated a Buy rating, while cutting the price target from $400 to $370.

Lululemon Athletica sales plans are "on track" and the product launches in the first half of the year are likely to scale in the second half, Hutchinson said. She added, however, that the company's second-quarter earnings guidance of $2.85-$2.90 per share came significantly below consensus of $3.28.

"Management has not seen an increase in markdowns but embedded some caution in the outlook given slowing traffic trends and macro uncertainty," the analyst wrote. While Lululemon Athletica’s sales growth in China has slowed, the company still expects a 25%–30% increase this year, she added.

Check out other analyst stock ratings.

Needham On Lululemon Athletica

Analyst Tom Nikic maintained a Buy rating, while reducing the price target from $366 to $317.

Although Lululemon Athletica's first-quarter results were "fairly lackluster," the pressure on the shares "seems aggressive" compared to the extent of the guidance cut, Nikic said.

"That said, the domestic business remains sluggish and international comp growth slowed dramatically in Q1, likely raising questions about the growth algo from here," the analyst wrote.

JPMorgan On Lululemon Athletica

Analyst Matthew Boss reiterated an Overweight rating while slashing the price target from $389 to $303.

Lululemon Athletica reported earnings of $2.60 per share, beating the consensus and its own guidance of $2.53-$2.58 per share, Boss said. The earnings beat was driven by marginally higher revenue growth of 7.3% year-on-year and gross margin expansion, he added.

Management indicated that trends so far in the second quarter had remained in line with the first quarter, the analyst stated. "In addition, management cited expectations to build on momentum from new product launches, including the Align No-Line legging, with plans to scale distribution to the full fleet by September," she further wrote.

LULU Price Action: Shares of Lululemon Athletica had declined by 19.92% to $264.88 at the time of publication on Friday.

Read More:

• LULU Stock Under Pressure As Company Warns Q2 Will Feel Tariff Heat, Plans ‘Strategic Price Increases’ — But Gary Black Blames EPS Revision On ‘Competition,’ Not ‘Macro Challenges’

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