Lululemon (LULU) , well-known for its luxurious athletic put on, is affected by a drastic change in buyer conduct that is impacting gross sales, and its CEO has launched a plan to reverse the alarming development.
In Lululemon’s second-quarter earnings report for 2025, it revealed that whereas its web income within the Americas elevated by 1% year-over-year, its comparable gross sales within the area declined by 4%.
Additionally, in response to latest information from Placer.ai, buyer visits in Lululemon’s same-store places dropped by a whopping 8.5% year-over-year throughout the quarter.
The drop in gross sales and foot site visitors comes after Lululemon instructed its traders throughout an earnings name in June that it will quickly implement “modest” value will increase on a small portion of its gadgets to assist mitigate the influence of heightened tariff charges.
Many shoppers nationwide have not too long ago adjusted their purchasing habits as tariffs threaten to make on a regular basis items dearer.
A latest survey from market analysis firm Numerator discovered that 81% of shoppers are delaying nonessential or costly purchases, shopping for fewer imported items, trying to find gross sales and coupons, and switching to purchasing at lower-priced retailers and low cost shops to keep away from paying inflated costs brought on by tariffs.
Lululemon is affected by shrinking shopper demand.
Picture supply: Qilai Shen/Bloomberg by way of Getty Photos
Lululemon CEO identifies “root cause” of the issue
Throughout an earnings name on Sept. 5, Lululemon CEO Calvin McDonald mentioned that the corporate is “not happy” with its efficiency within the U.S., flagging that shopper demand is declining.
“The overall market for premium athletic wear in the U.S. remains challenging, with declines continuing in quarter two,” mentioned McDonald. “Consumers are spending less on apparel overall, spending less in performance activewear, and are being more selective in their purchases, seeking out truly new styles.”
He mentioned that Lululemon’s core manufacturers, like Scuba, Softstreme, and Dance Studio, are the place the corporate sees “fatigue with the consumer,” particularly its loyal “high-value consumer.”
McDonald highlighted {that a} lack of “newness” in a few of Lululemon’s attire classes has been the “root cause” of lower-than-expected gross sales.
“I now believe we have let our product life cycles run too long within many of our core categories, particularly in lounge and social,” said McDonald. “We’ve become too predictable within our casual offerings and missed opportunities to create new trends.”
He said Lululemon’s lounge and social product offerings “have become stale and have not been resonating with guests” amid growing competition.
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“My view now is that we have relied on the same product playbook across certain categories for too long,” said McDonald. “The competitive landscape is different today than it was even two or three years ago. While no single competitor is having a meaningful impact on our business, there are now many players in the market.”
McDonald said it is “imperative” for Lululemon to now offer “the right balance’’ of its core product and new offerings going forward, a change the company’s design team is working on completing by next year.
“Some areas of focus for our new design team include maintaining our momentum in performance activities, designing into several new products across lounge and social, and giving a fresh perspective to some of our most iconic items,” said McDonald. “As a result of their work, we intend to increase new styles as a percentage of our overall assortment from the current 23% to approximately 35% next spring. We will continue to gauge guest behavior and adjust this penetration in future seasons based upon their response.”
Lululemon plans a harsh change in stores
As Lululemon plans to further innovate its product offerings, customers can expect to pay higher prices for items as the company battles tariffs and the end of a trade rule called “de minimis,” which allowed items from China which can be lower than $800 to enter the U.S. duty-free with minimal inspections.
“We are navigating increased costs related to tariffs and the removal of the de minimis exemption,” mentioned Lululemon Chief Monetary Officer Meghan Frank throughout the earnings name. “Given these factors, we believe it’s appropriate to be prudent in our planning and financial outlook for the remainder of the year. We are taking actions in both the near-term and long-term to mitigate the increased tariff costs, including strategic pricing actions, supply chain initiatives, including vendor negotiations, and enterprise-wide expense savings initiatives.”
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She mentioned the corporate remains to be introducing “modest price increases” on a small portion of its product assortment, a change that may proceed to roll out over the subsequent few months.
“We continue to look at pricing,” mentioned Frank. “I would say those actions are in the process of rolling out, and we’re pleased with them to date. That’s still in front of us. We’ll continue to look at it as a lever as we move through the second half of this year and into next.”
The value will increase come throughout a time when shopper sentiment is dropping after increased tariff charges went into impact Aug. 7. In response to latest information from the College of Michigan, shopper sentiment fell by 5% originally of August, the primary lower in 4 months.
“The economy will likely stay in low gear in the second half of 2025, then gain traction as fiscal policy becomes more supportive in 2026,” mentioned Comerica Financial institution Chief Economist Invoice Adams in an announcement to TheStreet.
Amid weak shopper demand and future value will increase, Lululemon now expects its U.S. income to say no by 1% to 2% for the remainder of 2025.
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