**Lululemon Beats Q1 Expectations but Slashes Full-Year Guidance Amid Market Uncertainty**

Lululemon has managed to surpass Wall Street's projections for its fiscal first-quarter earnings but has cut its full-year earnings forecast, citing a "dynamic macroenvironment." CEO Calvin McDonald emphasized in a news release that the company aims to leverage its financial strength and competitive advantages to invest in growth opportunities despite economic challenges. Consequently, shares of the apparel company plummeted by about 20% in extended trading.

For the first quarter ending May 4, Lululemon reported earnings per share of $2.60, edging past analysts' expectations of $2.58. Moreover, the company achieved $2.37 billion in revenue, marginally surpassing the anticipated $2.36 billion. Despite these positive results, the company has revised its full-year earnings expectations to a range of $14.58 to $14.78 per share, a decrease from the previously projected range of $14.95 to $15.15. Analysts, on the other hand, had anticipated full-year earnings of $14.89 per share.

The fiscal first-quarter report comes amid broader market uncertainty and follows trends seen among other retailers. Companies like Abercrombie & Fitch and Macy's have also cut their profit outlooks due to concerns over tariffs and a slowing U.S. economy. Notably, Lululemon's athleticwear competitors are facing similar challenges, with Gap anticipating a tariff-related impact of $100 million to $150 million and Nike planning to raise prices on various products.

Lululemon's net income for the first quarter was reported at $314 million, or $2.60 per share, down slightly from $321 million, or $2.54 per share, a year earlier. Revenue climbed to $2.37 billion from approximately $2.21 billion during the same period last year. For the second quarter, the company expects revenue between $2.54 billion and $2.56 billion, alongside expected full-year fiscal 2025 revenue of $11.15 billion to $11.3 billion, consistent with its previous forecast. However, the expected second-quarter earnings per share range of $2.85 to $2.90 falls short of Wall Street's projection of $3.29.

Prior to President Trump's April 2 tariff announcement, Lululemon had indicated during their March earnings call that they anticipated minimal impact from tariffs. In 2024, Vietnam accounted for 40% of Lululemon's product manufacturing, with significant production also taking place in Cambodia (17%), Sri Lanka (11%), Indonesia (11%), and Bangladesh (7%).

Comparable sales for the quarter showed a 1% year-over-year increase, contrasting with Wall Street's 3% growth expectation. This includes a 2% drop in the Americas and a 6% rise internationally. The company's gross margin was 58.3%, ahead of the 57.7% anticipated.

With these fluctuations, Lululemon’s stock has decreased by about 13% year-to-date, underscoring the market's reaction to the evolving economic conditions impacting the retail sector.