In this articleLULU your favorite stocksCREATE FREE ACCOUNTSign at the entrance to the Lululemon store in Midtown Manhattan.
Erik Mcgregor | Lightrocket | Getty ImagesLululemon s plunged in ext trading Thursday after the company gave a much worse than expected full-year outlook.The company topped second-quarter earnings estimates but slightly missed revenue expectations.
It said it expected tariffs to hit its full-year fits by $240 million.Lululemon said it expects full fiscal-year earnings of $12.77 to $12.97 per , well below Wall Street estimates of $14.45 per .
It also anticipates full-year revenue of $10.85 billion to $11 billion, compared with Wall Street expectations of $11.18 billion."We are facing yet another shift today within the industry related to tariffs and the cost of doing ," CEO Calvin McDonald said on a call with analysts.
"The increased rates and removal of the de minimis visions have played a large part in our guidance reduction for the year."Here's how the company did for its second quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:Earnings per : $3.10 vs.
$2.88 expectedRevenue: $2.53 billion vs. $2.54 billion expecteds of the company sank more than 12% after the bell Thursday.
The stock is down more than 45% this year.gramming note: Lululemon CEO Calvin McDonald will be interviewed exclusively on CNBC's "Squawk on the Street" on Friday.The company reported second-quarter net income of $370.9 million, or $3.10 per , compared to $392.92 million, or $3.15 per , in the year-ago period.
Gross margin decreased 1.1 percentage points to 58.5%, and operating margin decreased 210 basis points to 20.7%.Chief Financial Officer Meghan Frank said on the call that the removal of the de minimis exemption, which excluded some smaller shipments from tariffs, will significantly affect the company, representing roughly 1.7 percentage points of the 2.2 percentage-point tariff-related decline in fit expected for the year.Same-store sales in the Americas were down 4%.
Overall comparable sales increased just 1% compared to Wall Street estimates of 2.2%.
Lululemon said it added 14 net new stores during the second quarter, bringing its total to 784 stores."My view is that it's now time to reset many of our practices related to how we develop and create the range of ducts that will fuel the next phase of our growth," McDonald said Thursday.
"We have seen that when we get our duct right, everything else can ."Lululemon jects third-quarter revenue will come in between $2.47 billion and $2.50 billion compared to Wall Street estimates of $2.57 billion.
The company said it expects earnings per in the next quarter to come in between $2.18 and $2.23 per , compared to an estimate of $2.93 per .McDonald said on the Thursday call that he believes the company has let its duct lifecycles "run too long," particularly in its lounge and social ."We have become too predictable within our casual offerings and missed opportunities to create new trends," he said, identifying those issues as the "root causes" of the company's duct challenges in the U.S."Our lounge and social duct offerings have become stale and have not been resonating with guests," McDonald added.To regain its U.S.
momentum, McDonald said the company plans to increase its new styles from 23% of its overall asment to 35% next spring, and imve its fast-track design capabilities.
He said Lululemon will not make any short-term decisions that "could hurt or damage" the brand in the long term."We are not satisfied with the results for the quarter, and we know our brand can and will perform better than these results," McDonald said.Don’t miss these insights from CNBC What Nvidia's earnings mean for the stock market and AI tradeJosh Brown says if Apple announced a deal with Perplexity AI, the s would hit a recordChallenging Buffett: Buying wonderful companies at fair prices isn't more fitableBest Stocks: The value name with one of the best long-term charts Josh Brown has ever seen