NEWSLETTER
Mul
Lulhemon (Lulu) That he is famous for his high -end sportswear, ended 2024 with a worrying note, since he began to face a surprising change in customer behavior, and his CEO sounds the alarm of the source of the problem.
In the Lululemon Fourth Quarter Income Report by 2024, he revealed that although his net income increased 13% year after year during the vacation season, his comparable sales in the Americas were flat, compared to the same period of time in 2023.
According <a target="_blank" href="https://www.placer.ai/blog/sportswear-in-the-new-year”>Recent data Of pleasure. This is weaker than the increase of approximately 8.2% in the pedestrian traffic he faced in the previous quarter.
Related: five below considers a hard change in the middle of the threat of tariffs
Lululemon CEO marks an important problem
During a profit call on March 27, Lululemon CEO, Calvin McDonald, warned that the company continues to see a weakening in consumer demand, despite recent efforts to attract more customers to stores.
“We start this year with several releases of new convincing products, but we also believe that the dynamic macro environment has contributed to a more cautious consumer,” McDonald said.
Shuttersock
He said that many of his clients are hardening their expenses due to “economic and political uncertainty”, which is contributing to a decrease in pedestrian traffic in stores.
“According to a survey we conducted earlier this month together with IPSO, consumers are spending less due to the greatest concerns about inflation and economy,” McDonald said. “This is manifesting in a slower traffic throughout the industry in the United States in quarter 1, which we are also experiencing in our business.”
Lululemon's clothes are often sold at premium prices, with many articles, such as hoods, leggings and bodies, which are sold for more than $ 100. Therefore, it is not surprising that US consumers may be eliminating high -end clothes from their budgets.
Lululemon faces a great threat
Many consumers throughout the country have been buying more and more second -hand clothes while fighting inflation and the highest costs of life.
In 2024, the US second -hand clothing market. grew in 14%, its stronger annual growth since 2021.
Related: Puma announces a tough decision in the midst of the decrease in sales
More consumers are more interested in second -hand clothes, especially after President Donald Trump imposed 20% rates on all goods imported from China and 25% in all goods imported from Mexico and Canada earlier this month.
Tariffs are taxes that companies pay to import goods from abroad, and the additional cost is often transmitted to consumers through price increases.
According to a recent one survey From Thredup and Globaldata, 59% of consumers said that if tariffs make clothes more expensive, they will buy more affordable options, such as second -hand clothes.
More retail:
- AT&T issues a warning in silence to customers
- Sam's Club makes a great change in a dear membership benefit
- Gamestop announces a risky movement in the midst of store closures
In addition, 34% of consumers said they plan to spend their second -hand clothing budget in the next 12 months.
In the midst of this worrying trend, Lululemon will focus more on product innovation, since it sails the uncertain macro environment in the United States
“We will control what we can control,” McDonald said. “We will focus on continuing to offer the high level of novelty and innovations of products that our guests expect from Lululemon.”
Lululemon hopes to generate $ 2.34 billion at $ 2.36 billion in revenues during the first quarter of this year, which is lower than the expectations of Wall Street analysts of $ 2.39 billion.
Shortly after Lululemon reported his profits from the fourth quarter on March 27, his shares fell by approximately 15%.
Related: The veteran fund manager presents a striking prognosis S&P 500
