📉 Huge drop in Lululemon stock!
Lululemon $LULU, the premium sportswear icon, reported solid fiscal Q1 results , but the market reacted sharply to reduced full-year earnings guidance and management's more cautious tone. As a result, the stock lost around 20 % of their value today.

📊 Q1 key numbers:
Earnings per share: $2.60 ($2.58 expected)

Revenue: USD 2.37 billion (USD 2.36 billion)

Net Profit: $314m (Q236m). USD

Comparable sales: +1% (but -2% in the Americas)

Gross margin: 58.3% (57.7%)

🧠 What did the market react to?
Although the numbers were relatively okay this quarter, the company lowered its full-year earnings per share guidance to $14.58-$14.78 (original estimate up to $15.15). This is due to a combination of macroeconomic uncertainty, a cautious US consumer and the impact of tariffs.

While CEO Calvin McDonald remains confident in growth opportunities, he openly acknowledged that the U.S. consumer "is shopping with purpose and restraint". At the same time,CFO Meghan Frank pointed to strategic price increases on some of the range in response to increased costs caused by the new tariffs.

🌍 Global production mix and tariff pressure:
Lululemon does not own manufacturing plants and is fully dependent on external suppliers. Up to 40 % of production comes from Vietnam, the rest from other developing countries. The company's outlook assumes the current 30% tariff on imports from China and other 10 % on other regions. Therefore, the company expects a 110 bps decline in annual gross margin , which is worse than the original estimate.

However, Lululemon is still growing, especially in international markets.
The brand has loyal customers and a premium position.

However, the current market environment is not just about growth. The market is punishing any signs of weakness and doubt. And it is the more cautious outlook, the decline in US and sensitivity to the Trump administration's tariff policy have caused the market to reassess valuations.

What's your take on the company's performance?