Lululemon Athletica saw its shares plummet by as much as 21% on Friday after the premium activewear brand warned that new U.S. tariffs and faltering demand in North America and China are likely to hurt profits this year.
The sharp drop, its worst trading day since March 2020, puts the stock on track to lose around $8 billion in market value.
Shares were trading at approximately $264 by mid-day Friday, with the stock now down 14% year-to-date.
Executives at the Canadian company said they will introduce modest price increases on a small portion of products but will also lean more heavily on promotions throughout the year to manage costs and shifting consumer sentiment.
Popular Lululemon items, such as its Align yoga pants, retail for up to $128.
Lululemon is among a growing number of sportswear brands including Nike and On that are raising prices as tariff pressures mount under President Donald Trump’s trade agenda.
The company expects shrinking margins from new tariffs, which will affect imports from key sourcing countries like Vietnam, Cambodia and Sri Lanka.
The news sparked concern among analysts. UBS’s Jay Sole said the results point to deeper issues, especially as domestic sales have slowed over the past year.
Jefferies analyst Randal Konik also raised flags about the company’s strategic focus, noting that while Lululemon continues to invest in product innovation and Chinese expansion, it appears to be neglecting waning demand from core US customers.
“Despite [Americas] decline, management continues to prioritize product newness and China expansion over addressing a pullback from core customers and evident traffic declines,” Konik wrote.
At least 12 brokerages downgraded their price targets on the stock, with J.P. Morgan making the steepest cut—from $389 to $303.
Lululemon’s forward price-to-earnings ratio now sits at 21.46, notably lower than Nike’s 31.37 but higher than Gap’s 9.54, reflecting ongoing investor caution amid a challenging retail landscape.
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