Lululemon warns on FY2026 outlook as tariffs and weak demand pressure margins

South African Market Summary

The JSE All Share Index rose 0.59% to 117,252.45, with the Top 40 gaining 0.63% to 109,579.44, supported by retail sector developments. Mr Price signalled further selective international expansion following its entry into Europe via the NKD Group acquisition, although management ruled out a global footprint. Woolworths announced the acquisition of in2food to strengthen supply chain control and product quality, aligning with broader retail integration trends. Separately, Postbank secured FSCA approval as a financial services provider, marking progress towards its transition into a fully-fledged commercial bank.

European Market Summary

European equities edged higher, with the STOXX 600 rising 0.64% to 602.31, as investors stabilised following recent volatility linked to Middle East tensions and awaited central bank guidance. However, macro sentiment weakened sharply, with Germany’s ZEW economic sentiment index falling to -0.5, its lowest level since April 2025 and well below expectations, signalling deteriorating confidence. Meanwhile, the Bank of England proposed enhanced liquidity rules to strengthen banks’ resilience during stress events, reflecting ongoing regulatory adjustments following prior banking sector disruptions.

US Market Summary

Wall Street closed higher, led by gains in AI-linked stocks, with Meta rising 2.3% on reports of significant workforce reductions to fund AI investment and drive efficiency. Market sentiment remains underpinned by resilient technology performance, despite the S&P 500 still being modestly negative year-to-date. The Federal Reserve is expected to hold rates steady, with expectations for rate cuts pushed out beyond October, reflecting persistent inflation uncertainty. Meanwhile, February industrial production rose 0.2%, slightly ahead of expectations, signalling continued underlying economic resilience.

Asian Market Summary

Asian equities rallied as oil prices stabilised and investors turned their attention to the upcoming Federal Reserve decision for guidance on growth and inflation dynamics. Japan provided a positive macro signal, with manufacturing confidence reaching a four-year high, supported by chemicals, petroleum and semiconductor recovery. Trade data also surprised to the upside, with exports rising 4.2% and a return to a trade surplus. However, the outlook remains clouded by Middle East tensions, rising input costs and subdued Chinese demand, tempering broader regional sentiment.

Currency Market Summary

The South African rand traded largely flat as investors monitored escalating Middle East tensions and awaited the Federal Reserve’s policy decision. The US dollar paused after recent strength but continues to benefit from safe-haven demand amid geopolitical uncertainty. The yen remained under pressure near intervention-sensitive levels, highlighting concerns around potential policy action from Japanese authorities. Meanwhile, the euro edged lower ahead of the European Central Bank meeting. Currency markets remain driven by shifting risk sentiment and central bank expectations, with geopolitical developments continuing to anchor near-term direction.

Commodity Market Summary

Oil prices eased modestly following a deal to resume Iraqi exports via Turkey’s Ceyhan port, offering limited relief to supply concerns. However, Brent crude remains above $100 per barrel, supported by significant disruptions linked to Middle East tensions, including a sharp decline in Iraqi output and constrained flows through the Strait of Hormuz. Escalating geopolitical risks, including leadership developments in Iran and continued resistance to de-escalation, underpin elevated risk premia. Meanwhile, gold prices held steady as investors await Federal Reserve guidance, balancing safe-haven demand against monetary policy uncertainty.

Woolworths Holdings Limited (WHL) +0.08%

Woolworths announced the proposed acquisition of 100% of in2food, a key long-standing supplier generating over R5 billion in annual revenue, as part of its strategy to strengthen its premium food value chain. The transaction enhances supply chain resilience, innovation and speed-to-market, while supporting growth in food services and export channels. Management expects the deal to be earnings-accretive over time, with operational continuity maintained through retention of in2food’s leadership team. Funded via cash and facilities, the transaction remains subject to regulatory approvals and is classified as non-categorised under JSE rules.

Primary Health Properties plc (PHP) -1.27%

Primary Health Properties reported a strong increase in net rental income (+49% to £230 million), supported by portfolio expansion to £6.0 billion, while adjusted EPS rose 4% to 7.3 pence. Statutory EPS more than doubled, although HEPS declined modestly. The dividend increased 3% and remains fully covered. Operational metrics remain robust, with 99% occupancy and a WAULT of 10.8 years. However, balance sheet pressure is evident, with LTV rising to 57% and NAV per share declining, reflecting higher leverage and portfolio revaluation dynamics.

Old Mutual Limited (OMU) -0.55%

Old Mutual reported a resilient FY2025 performance, with adjusted headline earnings rising 24% to R8.3 billion and results from operations increasing 13% to R9.8 billion, supported by improved performance in Insure and Life & Savings. Group equity value per share rose 2% to R19.80, while total dividends increased 8% to 93 cents per share. However, value of new business declined sharply, reflecting persistency assumption changes. The Group’s strategic reset prioritises value realisation, capital discipline and growth, with a strong solvency ratio of 162% and ongoing share buybacks supporting shareholder returns.

STADIO Holdings Pty Ltd. (SDO) +3.72%

STADIO Holdings reported a robust FY2025 performance, with revenue increasing 14% to R1.8 billion, supported by solid student enrolment growth across both semesters. EBITDA rose 21% to R553 million, while profit after tax increased 24% to R341 million. Core headline earnings advanced 22%, reflecting underlying operational strength. EPS and HEPS grew 25% and 23% respectively, alongside a 6% increase in net asset value per share. The Group declared a final dividend of 18.4 cents per share (+22%), underscoring strong cash generation and continued growth in its higher education platform.

Libstar Holdings Limited (LBR) -4.23%

Libstar reported a materially improved FY2025 performance, with revenue increasing 8.2% and normalised HEPS rising 21.7% to 70.6 cents, reflecting execution of its Simplification, Growth and Sustainability strategy. Margin expansion was supported by disciplined cost management, procurement efficiencies and improved capacity utilisation, with gross margin increasing to 22.0%. Both Ambient and Perishable categories delivered solid growth. Strong cash generation improved the cash conversion ratio to 95% and reduced leverage to 0.9x EBITDA. The Group increased its dividend to 28 cents per share, signalling enhanced balance sheet strength and earnings quality.

Lululemon Athletica Inc. (LULU) -0.40%

Lululemon issued FY2026 guidance below expectations, forecasting revenue of $11.35–$11.50 billion and EPS of $12.10–$12.30, reflecting margin pressure from higher US import tariffs and softer consumer demand. Gross margins declined sharply in Q4, driven primarily by tariff impacts. While the group delivered a strong holiday quarter, supported by 17% international revenue growth, challenges persist around product innovation, competitive intensity and leadership uncertainty following CEO changes. Strategic actions to reduce markdowns and offset tariff costs are underway, but near-term earnings visibility remains constrained.

Thyssenkrupp Nucera AG (NCH2) +5.68%

Thyssenkrupp Nucera lowered its FY2026 guidance, citing higher-than-expected costs in its green hydrogen segment. The company now expects revenue of €450–€550 million, below prior forecasts, and widened its EBIT loss outlook to €30–€80 million. The downgrade reflects increased expenses on delivered projects and the termination of a 20MW pilot contract, with the hydrogen segment remaining the primary drag on performance. Segment sales expectations were also reduced, highlighting execution challenges in scaling green hydrogen. The update underscores ongoing cost pressures and profitability risks within the emerging hydrogen value chain.

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