Lululemon Athletica, the Canadian athleisure giant, is facing mounting pressure as a combination of U.S. tariffs and weakening domestic sales disrupt its growth trajectory. The recent removal of the "de minimis" exemption, which had allowed duty-free shipments under $800, is expected to cost the company around $240 million in gross margin this year. This change, coupled with escalating tariffs, has forced Lululemon to revise its full-year revenue forecast downward, triggering a 15% drop in its share price. CEO Calvin McDonald acknowledged that the brand had become "too predictable," with stale product cycles failing to excite consumers in a cooling U.S. market. While international markets like China continue to show strong growth, the company is now focused on refreshing its product lineup and adjusting its supply chain to mitigate rising costs. The situation highlights the vulnerability of global retailers to policy shifts and changing consumer behavior, even for well-established brands. Adidas warned that the tariffs will cost it €200m (£173m; $233m) and raised prices for American customers. Nearly half of the company's products are made in Asia.
BBQ - How might changes in international trade policy, such as tariffs and the removal of duty exemptions, affect a company’s pricing strategy and profitability?
