Recently, Lululemon released its financial report for the first fiscal quarter. Despite its financial report performance exceeding Wall Street's expectations, Lululemon still chose to lower its full-year performance forecast under the uncertainty of the macro environment brought about by Trump's tariffs. This also caused the company's stock price to plummet by more than 22% after the market closed.
As the company is dealing with tariffs and concerns about the slowdown of the US economy, Lululemon's CEO Calvin McDonald said in a press release: "We intend to attack by leveraging our strong financial position and competitive advantages, while we will continue to invest in the growth opportunities before us."
Meghan Frank, the company's chief financial officer, added during the conference call that Lululemon plans to "strategically raise prices item by item in our product range" to mitigate the impact of tariffs.
She said, "We will raise the prices of a small number of products. The increase is not significant." She added that the price increase would start in the second half of the current quarter and continue until the third quarter.
The financial report shows that in the first fiscal quarter ending May 4th, Lululemon actually achieved a decent performance: total net income increased by 7% to 2.4 billion US dollars. The company has 770 stores worldwide, with a net increase of 3 stores this quarter. Digital channel revenue was 961 million US dollars, accounting for 41% of the revenue. Revenue from men's clothing and women's clothing increased by 8% and 7% respectively. The gross profit margin in the first quarter was 58.3%, compared with 57.7% in the same period of the previous year. The quarterly operating profit was 439 million US dollars, accounting for 18.5% of the net income, compared with 19.6% in the same period of the previous year.
However, the company has lowered its full-year profit forecast. The company expects its earnings per share for the full year to be between $14.58 and $14.78. It has been significantly revised down from the company's previous forecast of $14.95 - $15.15, and is also slightly worse than the $14.89 expected by analysts.
By the end of 2024, 40% of Lululemon's products will be produced in Vietnam, 17% in Cambodia, 11% in Sri Lanka, 11% in Indonesia, 7% in Bangladesh, and the rest in other regions. The company does not directly own or operate any production facilities. Instead, it relies on suppliers to provide fabrics and contract manufacturing for its products.
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