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Forbes
Forbes
28 Mar 2025


Athletic wear giant Lululemon headed toward one of its worst stock market losses ever Friday amid concerns about how one of the most prominent Canadian business operating in the U.S. is navigating a rocky macroeconomic picture due to President Donald Trump’s tariffs, including a 25% duty on Canadian imports, and the associated weakening of consumer confidence.

Lululemon Store in Shanghai

A Lululemon flagship store seen in Shanghai, China this week.

CFOTO/Future Publishing via Getty Images

Lululemon stock fell 15% to about $290 by mid morning, hitting its lowest intraday share price since October.

If losses hold, Friday will be the worst percentage loss for Lululemon shares since last March, its second-biggest drop of the last five years and ninth-steepest decline since the company’s 2007 initial public offering, according to FactSet data.

The selloff came even after Lululemon topped Wall Street earnings forecasts for last quarter’s earnings and revenue in its late Thursday report, as investors winced at the company’s guidance for about 3% bottom line growth in 2025, which would be the worst since 2020, and management commentary on weak consumers and tariff impacts further shook the stock.

“The dynamic macro environment has contributed to a more cautious consumer,” Lululemon CEO Calvin McDonald said Thursday, adding the company has observed “slower traffic” across U.S. retail stores to start this year.

McDonald said the company’s financial guidance only accounts for a roughly 0.2 percentage-point slowdown tied to Trump’s Canadian and Mexican tariffs, but Wall Street expects a far greater impact, and Bank of America analysts cut their 2025 profit forecast for Lululemon by 2% to reflect the “margin pressure” posed by tariffs.

Lululemon was the worst-performing stock Friday on the S&P 500 stock index, which fell more than 1% on the latest indication U.S. inflation is stuck well above desired levels.

“If the rollout of tariffs continue, inflation ticks upward, and consumer sentiment worsens,” Lululemon would “almost certainly” face its first annual sales decline dating back to at least 2006, Bernstein analyst Aneesha Sherman predicted in a Friday note to clients.

“We are controlling what we can control,” McDonald told analysts Thursday, reflective of the often exasperated attitude expressed by executives at multinational firms steering the evolving economic landscape.

Sherman predicted Lululemon would be “severely impacted” by any tariffs Trump places on Vietnam, which could be a part of his “Liberation Day” reciprocal tariffs due next week. Though Canadian-based, Lululemon sources about 40% of its products from Vietnam and just 4% from Canada and Mexico, according to Sherman.

Tariffs are particularly challenging for retailers like Lululemon, as they are either forced to increase sticker prices, cutting into demand, or absorb the import taxes and keep prices the same, damaging profit margins. Earlier this month, Trump imposed a 25% tariff on all Canadian and Mexican goods, though he later relented to exempt some goods, that exemption is due to expire next month. Numerous measures indicate many Americans are bracing for an economic downturn, as the Conference Board’s consumer confidence measure plunged this month to a four-year low and Bank of America’s fund manager survey just saw the second-largest monthly jump in economic pessimism over the last three decades. ““The recession risks are uncomfortably high and they're rising,” Moody’s Analytics’ chief economist Mark Zandi warned last month.

Lululemon is far from the first (and won’t be the last) major company to sound the alarm on significant tariff-related drags on its business. Walmart, the world’s largest company by revenue, has warned Americans will likely face higher prices at its stores and is at odds with China over Trump’s tariffs on the country, Ford CEO Jim Farley said the trade war will “blow a hole” in American industry and Tesla CEO Elon Musk, the self-proclaimed “first buddy” of Trump, bemoaned earlier this week the impact on his electric vehicle company is “still significant.”