Lululemon’s stock just took a hard fall, and this time, leggings can’t soften the landing.
The athleisure giant saw its stock drop more than 20% after slashing its annual profit forecast, blaming weak store traffic, inflation, and the economic fallout of Donald Trump’s sweeping new tariffs. The company cited lower footfall across its U.S. stores and uncertainty around consumer spending.
A major point of concern: Lululemon’s global supply chain. Nearly 40% of its products are made in Vietnam, while another 28% of fabrics come from China, both now hit by the U.S.’s 10% blanket import levy. With margins under pressure, the brand says it will implement modest price hikes on select products while also cutting internal costs and renegotiating with vendors.
This move lands Lululemon on a growing list of retailers sounding the alarm on the trade environment. Adidas has already warned that popular models like the Samba and Gazelle will see U.S. price increases. Skechers withdrew its entire 2025 forecast, citing an unpredictable economic climate. Nike followed suit with price increases, and Dr. Martens blamed tariffs for a staggering 90% profit drop.
In a statement, Lululemon finance chief Meghan Frank said the company is focused on navigating the new normal with “strategic price increases” and tighter cost controls. But for investors, it’s clear: the post-pandemic surge in discretionary athleisure spending has cooled, and the trade war is back on.
Trump’s 2025 tariff expansion, imposing a flat 10% duty on goods from most foreign markets, is having a cascading effect on U.S. brands that depend heavily on overseas manufacturing. For companies without domestic production options, passing higher import costs onto consumers appears to be the only lever left.
As the consumer mood sours and inflation lingers, analysts are re-evaluating forecasts across the retail sector. For Lululemon, a company once celebrated for its bulletproof margins and loyal customer base, this week’s stock dip is a wake-up call. Profitability is no longer a given, and the brand’s next moves will be watched closely on Wall Street.
The real test? Whether customers will still be willing to pay premium prices for premium comfort, even as household budgets tighten.
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