Salient points
- The Athletic Lululemon shares have decreased by 21% in pre-market negotiations due to warnings on the costs related to rates and on the irregular demand in the key markets of North America and China, which should have an impact on profits this year.
- The company plans to modestly increase prices on a small part of its products and increase discounts for the rest of the year in response to competition and change in consumer behavior.
- Lululemon Athletics has lowered the predictions of the profits of 2025 and anticipates the pressure on the profit margins due to the proposed rates that affect the products from main hubs such as Vietnam, Cambogia and Sri Lanka.
The Athletic Luluulemon shares decreased by 21% in Friday pre-marketing negotiations on Friday, since the high-end leggings manufacturer warned that the costs related to rates and the irregular demand in the key markets of North America and China this year.The Canadian company, whose aligned yoga trousers sell for $ 128 each on its website, will increase the “modestly” prices for a “small part of the assortment” and increase discounts for the rest of the year, said the managers of the company.
Lululemon has struggled to retain buyers, despite his efforts to introduce new styles of sports bra and athletic jackets, as he faces intense competition from more fashionable and cheaper brands in North America and continental China.
“Despite the decline (Americas), the direction continues to give priority to the novelty of the product and the expansion of China on facing a pulback by the basic customers and an evident drop in traffic,” said Jefferies Randal Konik’s analyst in a note. “We believe this misalignment is worrying.”
Lululemon joins the Nike sportswear rivals and for the collection of prices in the United States as irregular commercial tactics under President Donald Trump Rattle Markets and the fuel fears of a recession.
Lululemon has cut its forecasts on the profits of 2025 and said that the margins are expected to be under pressure from the proposed rates, which will have an impact on the products of some of its largest supply hubs in Vietnam, Cambodia and Sri Lanka.
“My meaning is that in the United States, consumers remain cautious right now and are very intentional about their purchase decisions,” said CEO Calvin McDonald in a post-use call.
The shares of the company, which fell by about 14% this year, was exchanged at $ 261.90 before the bell on Friday. The news dragged Nike’s shares down by 1.4%.
The most expected price of Lululemon, a common point of reference for the evaluation of the shares, is 21.46, compared to that of 31.37 for Nike and 9.54 per gap.
Share This
Discover more from Gautam Kalal
Subscribe to get the latest posts sent to your email.
Be First to Comment