Lululemon squeezed by tariffs and weaker sales

Lululemon, a popular Canadian sportswear brand, is facing tough times due to new US government policies. The company recently warned that tariffs imposed by President Donald Trump and the closure of a duty-free loophole are hurting its business. These changes mean Lululemon will have to pay more money to bring its products into the US, which could cost the company about $240 million this year. Previously, companies could ship online orders worth up to $800 into the US without paying import duties, but that rule has now been removed.

Because of these new tariffs, Lululemon has lowered its sales forecast for the next three months to between $2. 47 billion and $2. 5 billion, which is less than what experts expected. Meghan Frank, the company's chief financial officer, said that the removal of the de minimis rule will have a big impact on Lululemon's earnings, especially because it will disrupt their online shipments to US customers. While Lululemon is seeing good sales in other countries, its performance in the US has been disappointing. Calvin McDonald, the CEO, said the company is looking for ways to reduce the impact of tariffs, such as changing its supply chain and cutting costs, but these solutions will take time to put in place.

Another issue for Lululemon is that its product cycles have become too long and predictable, which means the company has missed out on new fashion trends. Earlier this year, Lululemon announced it would raise prices slightly because of higher costs. Most of its products are made in Asian countries like China and Vietnam, which are among the hardest hit by US tariffs. Lululemon also faces more competition from cheaper brands like Vuori and Alo Yoga. As a result of all these challenges, Lululemon's shares dropped by more than 15% in extended trading in New York. Other sportswear companies, such as Adidas and Nike, are also struggling with tariffs and have raised their prices for American customers.