Lululemon’s shares plunged 20 percent on Friday as the athleisure brand reels from the consequences of Trump’s tariffs — and said it would up prices on some of its products.
The brand — which has earnt a cult following among millennial and Gen Z exercise enthusiasts — beat Wall Street’s expectations for its first quarter earnings, but cut its guidance for the rest of the year.
Sales were only up 1 percent year over year, compared to the 3 percent predicted by analysts.
The company said the ‘dynamic macroenvironment’ of tariffs and concerns about an economic downturn meant it has to readjust.
This will involve ‘strategic price increases’ to offset the negative effects of tariffs, chief financial officer Meghan Frank told analysts on the first quarter earnings call.
‘It will be price increases on a small portion of our assortments, and they will be modest in nature,’ she said.
The company has already faced criticism for the price of some of its items, including $128 yoga pants.
The price hikes will begin within a matter of weeks, Frank added.
Lululemon has earnt a cult following among millennial and Gen Z exercise enthusiasts
Lululemon said it would up prices on some of its products as a result of tariffs
CEO Calvin McDonald said he was ‘not happy’ about US growth figures and acknowledged that consumers are nervously pulling back their spending.
Lululemon has been hit hard by Trump’s trade policies as it sources from China, currently under a 30 percent tariff, and a range of other countries currently levied at 10 percent.
Last year 40 percent of the company’s products were manufactured in Vietnam, 17 percent in Cambodia and 11 percent in Sri Lanka and Indonesia respectively.
Lululemon joins a host of retailers that have been forced to pull or revise their full-year guidance after Trump’s chaotic tariff policies have upended business plans and trade relations.
Macy’s and Abercrombie & Fitch both slashed their profit outlooks, and American Eagle Outfitters pulled their full-year guidance completely.
Lululemon rival Gap said last week that it expects tariffs to cost its business $100 million to $150 million a year.
Nike said it would also be raising prices on a wide range of products.
It is not just clothing brands that have reacted to tariffs by hiking prices.
Lululemon saw its stock plunge on Friday
The athleisure maker will be raising prices in response to tariffs
Last year 40 percent of the company’s products were manufactured in Vietnam
CEO Calvin McDonald said he was ‘not happy’ about US growth figures
Walmart revealed that it would be passing on some of the cost of tariffs to its shoppers.
The grocery giant — which imports 60 percent of its goods from China — said the worst increases are still yet to come.
Car manufacturers such as Subaru and Toyota have both also said Americans will soon be paying more for their cars.
‘[Business is] not sustainable longer term without significant price increases,’ Mark Templin, Toyota’s chief operating officer for North America, said recently.
‘The industry already has an affordability problem.’
Toyota expects to pay $1.3 billion in tariff costs in April and May alone — and it’s already forecasting a 20 percent drop in profits for the upcoming year.