Wall Street’s Most Violent Earnings Betrayal Hits Lululemon as Traders Yeet Shares into Oblivion…

So, Lululemon dropped their earnings and, on paper, it didn’t look half bad. They beat on revenue. They beat on earnings. They even boasted that full-year $10.6 billion topline like it was their favorite pair of Align leggings. But Wall Street couldn’t care less. Why? Because Calvin McDonald went full Eeyore on the earnings call, talking up inflation, soft U.S. traffic, and a consumer who’s apparently too broke (or too over it) to shell out $128 for stretchy pants (that may or may not contain an alarming rate of lead). 

(Source: Giphy) 

This, of course, cue’d the bloodbath. $LULU cratered 15% on Friday, getting absolutely smoked off what should’ve been a solid earnings. Which is why, this my friend, is a masterclass in what happens when you beat expectations but then turn around and tell investors, “Yeah, buuuut next quarter’s gonna suck.” 

So with that said, let’s break this sh*tshow down. Again, yes Q4 was solid. $6.14 in earnings per share vs. $5.85 expected. $3.61 billion in revenue vs. $3.57 billion expected. Comparable sales up 3%, which is fine if you ignore that analysts were hoping for more like 5%. And internationally, Lululemon is still printing money—comps up 20% outside the U.S. But the problem is... America. The whole damn market is slowing, and Lululemon’s biggest segment—the U.S.—is flatlining.

(Source: CNBC) 

CEO Calvin McDonald tried to soften the blow by saying traffic was weak not just for them, but “across the industry.” Yes, we all know everyone’s hurting, but good Lord Calvin, that doesn’t make your guidance suck any less. For instance, first quarter revenue guidance came in at $2.34B to $2.36B, versus the $2.39B Wall Street was looking for. Full-year revenue? $11.15B to $11.3B, when the Street was modeling $11.31B. We’re not talking huge misses here, but in this market, you so much as blink wrong and hedge funds hit the sell button like it owes them money.

On the other end of the schtick, there’s the margins. And right now, it appears they’re about to get the SoulCycle treatment. CFO Meghan Frank said gross margin is expected to drop 60 basis points in 2025, thanks to a delightful triple threat: tariffs, FX headwinds, and fixed costs. About half of that drop is from Trump’s latest round of tariff cosplay. So yeah, now leggings are geopolitical. 

Spoiler: Tariffs, Guidance, and Weak Traffic (Source: Yahoo Finance) 

The company tried to downplay it, saying the tariff impact will be “minimal,” but then also admitted that they’ll take a full 100 basis point hit to operating profit margin year over year. Translation: That’s not minimal—that’s we’re going to feel the hell out of this. 

But, but, but… good news, Lululemon isn’t going bankrupt. Despite the major headwinds, the company is still expanding internationally, opening stores in Italy, Denmark, Belgium, Turkey, and the Czech Republic. Global brand, high margins, loyal customer base. They’ll bounce back. But when 75% of your business is in North America and that side of the house is looking uglier than a mud fence? You’re gonna get punished. 

(Source: Giphy) 

Wall street doesn’t care about new skorts, they care about growth. And right now, neither a grower or a friggin’ show’er. So yeah, guidance was soft, margins are slipping, and U.S. consumers are either broke, bored, or both. Until that changes, this stock is gonna be stuck in downward dog. Meaning, BTFD, or not—place your bets accordingly, and stay safe and stay frosty, friends! Until next time… 

P.S. Just when you thought our beloved congressmen couldn’t get any greasier, one Republican lawmaker decided to YOLO $175k into a stock… right before a major FDIC announcement hit. Lucky timing? Insider edge? You be the judge. We broke it all down inside our recent Stocks.News premium article… click here to check it out ASAP. 

Stocks.News does not hold positions in companies mentioned in the article.