Lululemon analysts reboot stock price target after earnings originally appeared on TheStreet.
Now that was a real lulu.
The dictionary tells us that the slang term “lulu”, which dates to the 1850s, can be used to describe a person or thing “outstanding for some quality.”
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That quality can be positive or negative, and for Lululemon (LULU) it translated into about 5 pounds of oy vey in a two-pound bag.
Shares of the Vancouver athleisure giant nosedived on June 6 after it beat Wall Street’s first-quarter-earnings expectations but slashed its full-year guidance, citing a “dynamic macroenvironment” that included increased competition and the impact of the Trump administration’s tariffs.
“The current tariff paradigm has brought uncertainty into the retail environment,” Chief Executive Calvin McDonald told analysts during the earnings call.
“As consumers try to assess the impact they will have on daily life, as businesses evaluate these impacts as well, I believe we are better positioned than most to navigate the near term while also maintaining our focus on investing in our growth potential over the long term,” he added.
Chief Financial Officer Meghan Frank said Lululemon estimated a thinner operating margin, which measures profitability by dividing a company’s operating income by its net sales for the full year. It now expects a narrowing of 1.6 percentage points, compared with the previous estimate of 1 point, “all driven by the net impact of tariffs.”
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“We are planning to take strategic price increases, looking item by item across our assortment as we typically do, and it will be price increases on a small portion of our assortment, and they will be modest in nature,” she said.
Comparable sales in the quarter rose 1% from a year earlier, missing analysts’ forecasts calling for a 3% increase. The result reflects a 2% decrease in the Americas and a 6% increase internationally.
“We’re definitely not happy where the growth is in the U.S., but relative to the market and our performance versus others, pleased that we’re putting on share, pleased with the reaction to the newness and with the mix of newness that’s coming,” McDonald said.
Lululemon is known for advanced athletic apparel, particularly its workout leggings, and it is said to use “holistic guerrilla marketing” to make customers feel that they are part of a community.
In April, President Donald Trump unleashed a broad range of tariffs that he has since paused and rebooted several times, causing widespread confusion among companies and consumers and in the markets.
Several retailers have reduced or withdrawn their guidance and indicated that they would raise prices due to the uncertainty surrounding the tariff regime.
Meanwhile, Trump said that Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick would travel to London along with U.S. Trade Representative Jameson Greer on June 9 for renewed trade talks with China, adding that “the meeting should go very well.”
Related: Lululemon’s latest viral product reveals something much bigger
Lululemon’s stock sank nearly 20% on June 6. The shares are off 31% in 2025 and down roughly 18% from a year earlier.
Several investment firms issued research reports on Lululemon following the earnings report, including Needham, which lowered its price target to $317 from $366 and affirmed a buy rating on the shares, according to The Fly.
The company posted fairly lackluster Q1 results, though the selloff in the stock seems “aggressive” relative to the size of management’s guidance cut, the investment firm said. That’s particularly since the guidance reduction is mostly tariff-driven, and also considers that management struck an encouraging tone about how new products are performing, Needham said.
Lululemon’s domestic business remains sluggish, however, while international comparable-sales growth slowed in Q1, likely raising questions about the growth algorithm going forward, Needham added.
Telsey Advisory analyst Dana Telsey pared the firm’s price target on Lululemon to $360 from $385 and maintained an outperform rating.
The Q1 results “nicely topped” the Wall Street consensus and the company’s guidance, Telsey said. Consumers continue to respond well to newness and new-product launches, Tesley added.
BMO Capital lowered its price target on Lululemon to $250 from $302 and maintained a market-perform rating.
The company reported what the investment firm called a slight top- and bottom-line beat to estimates, with better gross margins partly offset by a miss of estimates for selling, general and administrative expense.
But looking ahead, BMO Capital said, management guided in Q2 “materially below” estimates and pared the fiscal 2025 outlook for gross margin and earnings due to tariffs and markdowns.
This marks the first time the company has lowered its fiscal-year earnings forecast at Q1 since fiscal 2014, BMO Capital said.
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Lululemon analysts reboot stock price target after earnings first appeared on TheStreet on Jun 7, 2025
This story was originally reported by TheStreet on Jun 7, 2025, where it first appeared.
