• Lululemon reported earnings and revenue beats for its fourth-quarter earnings on Thursday.
• But the retailer's 2025 guidance came in below expectations, sending its shares plunging.
• CEO Calvin McDonald said U.S. traffic has fallen due to economic uncertainty, though the Canada-based company expects minimal disruption from President Donald Trump's tariffs.

Lululemon beat Wall Street expectations for fiscal fourth-quarter earnings and revenue, but issued 2025 guidance that disappointed analysts.

On an Thursday earnings call, CEO Calvin McDonald said the athleticwear company conducted a survey earlier this month that found that consumers are spending less due to economic and inflation concerns, resulting in lower U.S. traffic at Lululemon and industry peers. However, he said, shoppers responded well to innovation at the company.

"There continues to be considerable uncertainty driven by macro and geopolitical circumstances. That being said, we remain focused on what we can control," McDonald said.

Shares of the apparel company plunged 15% on Friday morning.

Lululemon was only the latest retailer to say it expects slower sales for the rest of this year as concerns grow about a weakening economy and President Donald Trump's tariffs. Even so, the Canada-based company said it expected only a minimal hit to profits from the U.S. trade war with countries including Canada, Mexico and China.

Here's how the company did compared with what Wall Street was expecting for the quarter ended Feb. 2, based on a survey of analysts by LSEG:

• Earnings per share: $6.14 vs. $5.85 expected
• Revenue: $3.61 billion vs. $3.57 billion expected

Fourth-quarter revenue rose from $3.21 billion during the same period in 2023. Full-year 2024 revenue came in at $10.59 billion, up from $9.62 billion in 2023.

Lululemon's fiscal 2024 contained 53 weeks, one week longer than its fiscal 2023. Excluding the 53rd week, fourth-quarter and full-year revenue both rose 8% year over year for 2024.

Lululemon expects first-quarter revenue to total $2.34 billion to $2.36 billion, while Wall Street analysts were expecting $2.39 billion, according to LSEG. The retailer anticipates it will post full-year fiscal 2025 revenue of $11.15 billion to $11.30 billion, compared to the analyst consensus estimate of $11.31 billion.

For the first quarter, the company expects to post earnings per share in the range of $2.53 to $2.58, missing Wall Street's expectation of $2.72, according to LSEG. Full-year earnings per share guidance came in at $14.95 to $15.15 per share, while analysts anticipated $15.31.

CFO Meghan Frank said on the Thursday earnings call that gross margin for 2025 is expected to fall 0.6 percentage points due to higher fixed costs, foreign exchange rates and U.S. tariffs on China and Mexico.

Lululemon reported a net income for the fourth quarter of $748 million, or $6.14 per share, compared with a net income of $669 million, or $5.29 per share, during the fourth quarter of 2023.

Comparable sales, which Lululemon defines as revenue from e-commerce and stores open at least 12 months, rose 3% year over year for the quarter. The comparison excludes the 53rd week of the 2024 fiscal year. Analysts expected the metric to rise 5.1%.

Comparable sales in the Americas were flat, while they grew 20% internationally. Lululemon has been facing a sales slowdown in the U.S., although McDonald said its U.S. business stabilized in the second half of the year and partially attributed the improvement to new merchandise. He added that Lululemon will expand its stores to Italy, Denmark, Belgium, Turkey and the Czech Republic this year.