The stock price of American sportswear brand Lululemon Athletica Inc. plummeted 23% after-hours trading on Thursday (June 5) U.S. time, due to slowing sales and a new round of tariff pressure on the Trump administration.
Management said that the new tariffs implemented by the United States in April significantly pushed up operating costs and may have a "significant impact" on profit margins in the future. It is expected to bear tariffs of 30% of Chinese goods and 10% of other countries' goods in the future.
The Trump administration has recently readjusted its trade policy, and many Asian production bases are facing higher tariffs, which has hit the clothing industry's supply chain again.
According to Lululemon's financial report released Thursday, its first-quarter sales were worse than market expectations, with comparable sales in the American market falling, further hitting investor confidence. The company expects second-quarter revenue to be between $2.54 billion and $2.56 billion, below average forecasts. The company will also lower its full-year earnings per share forecast.
However, weak consumer demand has made the outlook for price hike strategies unclear. CEO Calvin McDonald admitted that American consumers' current consumption decisions are more cautious, affecting overall sales performance. Lululemon's share price has fallen by nearly 14% so far this year. It closed at $330.78 on Thursday, but fell 22.37% after the market closed at $256.78.
McDonald originally planned to double sales in 2021 by 2026, but factors such as inflation, fierce competition and promotion have made this goal more difficult. The company expects sales growth to slow down for the fifth consecutive year in 2025.
According to Bloomberg, the company's chief financial officer Meghan Frank said in a conference call that the company plans to raise prices slightly to alleviate cost pressure. "The price increase will be concentrated on a few products, and the range will be relatively mild."