Lululemon Net Profit Falls 38% in Q1, Stock Drops 13% Premarket as Company Cuts Full-Year Guidance

According to its earnings report released on June 4, lululemon reported first-quarter net income fell 38% to $195 million, while operating profit dropped 37% to $277 million. Net revenue grew 4.3% to $2.472 billion, but operating margin contracted 7.3 percentage points to 11.2%. Diluted earnings per share declined 35% to $1.69. The stock dropped nearly 13% in premarket trading on June 5. Lululemon cut full-year guidance, projecting net revenue of $11.0–$11.15 billion, flat to down 1% year-over-year, versus prior guidance of $11.35–$11.5 billion growth of 2–4%. Management attributed the decline to negative publicity around product quality and brand disputes that suppressed customer traffic in North America and China, though the company stated the situation has since subsided.
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