Lululemon Delivers Solid Q1 2025 Earnings, Yet Stock Price Plunges Over Tariffs and Other Concerns

Athleisure brand Lululemon has been a mainstay of its segment for years now, with Quartz pointing out that its customers — typically more affluent and willing to spend about $125 on a basic dress — are showing more resilience in the face of macroeconomic uncertainty than many other U.S. consumers.

Its most recent fiscal report card — its Q1 2025 earnings report, delivered late June 5 — reinforces the idea that Lululemon is on relatively solid footing.

Total net revenue increased by 7%, or 8% on a constant dollar basis, reaching $2.4 billion in the first quarter of 2025 versus $2.2 billion in the year-prior period. However, its Americas numbers seemed a bit more troubling: Net revenue in that market increased just 3%, or 4% on a constant dollar basis, and comparable sales dipped by 2%, or 1% on a constant dollar basis. Net revenue was overall still a win, however, coming in at $1.7 billion versus $1.6 billion for Q1 2024. Growth was much stronger overseas, in China and the rest of the world.

Net income reached $314.6 million, or $2.60 per diluted share, versus $2.54 per diluted share last year.

Lululemon Stock Dives Despite Relatively Sunny Q1 2025 Earnings Report

Nevertheless, investors seemed spooked following the drop of the earnings report. As of 3 p.m. ET June 6, Lululemon’s share price had shed 19.65% of its value in a single-day drop, in what CNN termed “one of its biggest routs in history” after the company indicated that tariffs (in addition to other concerns) would damage its future profits.

Lululemon has reduced its guidance for the coming quarters, largely due to the headwinds that tariffs could enact both on its margins as well as on consumer buying power. The company’s CFO, Meghan Frank, stated as much during an earnings call held June 5.

“We did lower our op[erating] margin for the full year from 100 basis points decline year over year to 160. That’s all driven by the net impact of tariffs,” Frank said, per a transcript provided by The Motley Fool.

“We expect gross margin in Q2 to decline approximately 200 basis points compared to Q2 2024, driven predominantly by increased occupancy and depreciation, higher tariff rates, modestly higher markdowns, and foreign exchange,” she added.

As a May 5 Morgan Stanley research article indicated, retailers or businesses engaging in the sale of clothing, footwear, textiles, and adjacent materials are particularly burdened by ongoing tariffs, especially if they have extensive exposure to Chinese production.

It remains to be seen if Lululemon can bolster investor attitudes toward its immediate fortunes — and whether investors will see its current price point as a buying indicator or whether a lower price floor will be established.