Sportswear company Lululemon Athletica’s shares fell about 11 per cent in extended trading after it recently anticipated yearly revenue and earnings below forecasts due to a decline in demand for its premium athleisure, mostly in North America.
Lower orders for sportswear and apparel companies have been the result of excessive inventory levels at sporting retailers in the USA. Companies like Adidas, opens new tab, and Foot Locker have been cautious in reaction to uneven customer purchasing trends.
CEO Calvin McDonald stated in a post-earnings teleconference that Lululemon’s first-quarter sales in North America are off to a poor start and that the American consumer environment has been fairly difficult. In comparison to a 29 per cent increase a year earlier and a 12 per cent gain the previous quarter, it recorded a 9 per cent growth in North American sales in the fourth quarter.
Analyst forecasts for fiscal 2024 were US $ 10.90 billion, but the business predicted sales of between US $ 10.70 billion and US $ 10.80 billion, according to LSEG.
“Lululemon’s weaker-than-expected forecast underscores the broader challenges retailers are facing, as persistent price pressures drive shoppers to pull back on discretionary purchases and trade down to cheaper brands,” Insider Intelligence analyst Rachel Wolff said.
The biggest sportswear manufacturer in the world, Nike, predicted that its revenue would be in the low single digits for the first half of the 2025 fiscal year. This is because the company anticipated an impact from cutting back on several important brands and from worse consumer sentiment. But despite forecasts of US $ 3.19 billion, Lululemon reported fourth-quarter revenue of US $ 3.21 billion, primarily due to new styles for men and women like the casual sneaker Cityverse and the running shoes Beyondfeel and Beyondfeel Trail.
