Lululemon Slashes Profit Outlook as US Weakness Drives Earnings Miss Forecast

Market Performance

South African Market Summary

South African equities ended weaker, with the JSE All Share index down 0.47% at 112,453.45 points and the Top 40 falling 0.59% to 104,621.89 points, reflecting a softer domestic market session. Corporate focus turned to Wesizwe Platinum, which plans to retrench nearly 500 workers, or around 70% of the workforce, at its Bakubung mine as it shifts from a phased development model to a single-stage ramp-up targeting 3.5 million tonnes per year. The move highlights ongoing pressure across South Africa’s platinum sector, where electric-vehicle adoption continues to challenge long-term autocatalyst demand. Separately, President Cyril Ramaphosa said South Africa would send envoys abroad following recent xenophobic attacks targeting African immigrants.

European Market Summary

European equities advanced on Thursday as softer oil prices supported risk appetite, although investors remained cautious over whether recent Middle East developments could deliver a durable peace agreement. The pan-European STOXX 600 rose 0.5% to 624.45 points, led by healthcare gains, with French biotech Abivax rebounding 17.8%. Despite the session’s improvement, the index remained on track for a modest weekly decline, with the Strait of Hormuz still largely shut and energy-market risks unresolved. Persistent inflation pressures have also led markets to price in a 25-basis-point European Central Bank rate hike next week. In the UK, May new car sales rose 7.1%, supported by strong electric-vehicle demand, while Spain’s April industrial output increased 2% year-on-year.

US Market Summary

Wall Street advanced on Thursday as signs of progress towards ending the Iran war supported investor sentiment, although weakness in chip stocks weighed on the Nasdaq after disappointing results from Broadcom. The Dow Jones Industrial Average surged to a record closing high, supported by gains in healthcare and financial shares. Optimism was helped by the US House of Representatives passing a measure to block President Donald Trump from continuing the war on Iran, while a US-mediated ceasefire between Israel and Lebanon added to hopes for a broader settlement, despite Hezbollah rejecting the truce. Softer crude prices also reflected expectations of improved tanker traffic through the Strait of Hormuz. Economic data was weaker, with jobless claims rising and corporate layoffs increasing sharply in May.

Asian Market Summary

Asian markets weakened on Friday as the overnight selloff in Wall Street technology stocks filtered through the region, with South Korean equities leading losses. Investor sentiment was pressured by concerns around stretched valuations in global tech names, while currency-market developments kept Japan in focus. Japan’s foreign reserves fell by US$77 billion in May to US$1.306 trillion, from US$1.383 trillion a month earlier, after Tokyo resumed large-scale intervention to support the yen. The move followed separate Ministry of Finance data showing Japan spent ¥11.7 trillion, or about US$73.1 billion, since late April in its largest monthly intervention round on record. Separately, Japan’s real wages rose 1.9% year-on-year in April, marking a fourth consecutive monthly gain.

Commodity Market Summary

Gold prices fell on Friday and headed for a weekly loss as renewed Middle East tensions weakened hopes for a US-Iran peace deal and reinforced concerns over inflation and potential interest-rate hikes. Oil prices were broadly steady after sharp declines in the previous session, although both Brent and WTI remained on track for their first weekly gains in three weeks, with WTI up more than 6%. Market attention stayed focused on the Strait of Hormuz, where limited traffic continues to threaten global supply flows. Hezbollah’s rejection of a US-brokered Lebanon ceasefire further complicated peace prospects, with Iran linking any Washington agreement to a Lebanese truce. OPEC maintained its 2026 oil demand growth forecast at 1.2 million barrels per day.

Currency Market Summary

The rand strengthened on Thursday after South Africa’s trade ministry said the country remained compliant with domestic and international obligations on forced labour, easing some concern around Washington’s proposed tariffs on imports from around 60 countries, including South Africa. The pound was little changed as markets continued to monitor the uncertain outcome of US-Iran peace talks and broader Middle East risks. The US dollar remained on track for a weekly gain, supported by safe-haven demand as Gulf tensions persisted. In Asia, the Japanese yen again tested the critical 160-per-dollar level, despite verbal warnings from Japanese officials. Markets continue to view 160 as a potential trigger point for official intervention, keeping currency volatility elevated.

Domestic Company News

Old Mutual Limited (OMU) -0.16%

Old Mutual delivered a strong first-quarter operating update, with Life APE sales rising 28%, or 15% excluding a large corporate risk deal, reflecting broad sales momentum across most clusters. Gross flows increased 14% to R60.0 billion, supported by strong inflows in Old Mutual Investments, while net client cash flow improved 41%. The value of new business margin recovered to 1.6%, although it remains below the medium-term target range. Old Mutual Insure delivered a net underwriting margin above its 5%–8% target, supported by disciplined underwriting and claims management. OMLACSA’s solvency ratio strengthened to 186%, within target, while the group completed its R3 billion share buyback. OM Bank also gained traction, lifting customers to 473,000.

Nictus Limited (NCS) +7.14%

Nictus issued a positive trading statement for the year ended 31 March 2026, guiding for a material improvement in earnings compared with the prior year. The group expects earnings per share to range between 65.56 cents and 73.14 cents, up from 37.89 cents in the previous corresponding period, representing growth of between 73.03% and 93.03%. Headline earnings per share are expected to range between 65.63 cents and 73.17 cents, compared with 37.66 cents previously, implying an increase of between 74.28% and 94.28%. The update points to a significantly stronger full-year performance, although the financial information has not yet been reviewed by the company’s independent auditor. Full results are expected on or about 30 June 2026.

Sebata Holdings Limited (SEB) 0.00%

Sebata Holdings issued a trading statement indicating a significant turnaround in profitability for the year ended 31 March 2025. Management expects basic earnings per share to range between 81.17 cents and 101.17 cents, compared with a basic loss per share of 100.29 cents in the previous corresponding period. Headline earnings per share are expected to range between 90.66 cents and 110.66 cents, versus a headline loss per share of 102.20 cents for the year ended 31 March 2024. The update points to a material recovery in underlying earnings performance and a return to positive shareholder earnings. The financial information has not yet been reviewed or reported on by the company’s auditors, with results expected by 12 June 2026.

Global Company News

Lululemon Athletica Inc. (LULU) -0.88%

Lululemon cut its annual profit outlook and guided for second-quarter earnings well below market expectations, reflecting continued weakness in its key US market. The athletic apparel group now expects fiscal 2026 revenue to be flat to down 1%, compared with previous guidance for 2% to 4% growth, while full-year earnings per share are forecast at US$10.95 to US$11.15, down from US$12.10 to US$12.30 previously. Second-quarter earnings are expected at US$1.76 to US$1.81 per share, materially below consensus of US$2.68. US revenue fell 4% in constant currency during the first quarter, while China revenue rose 23%. Management cited weaker product traction, increased clearance needs and pressure from inflation, competition and brand fatigue.

Cooper Companies Inc. (COO) +2.78%

Cooper Companies reported better-than-expected second-quarter revenue and adjusted earnings, supported by sustained demand for contact lenses and continued adoption of premium daily disposable lenses. Revenue rose to US$1.08 billion, ahead of consensus expectations of US$1.05 billion, while adjusted earnings of US$1.21 per share exceeded forecasts of US$1.10. CooperVision, the group’s contact lens division, generated revenue of US$723.5 million, also ahead of expectations, although Asia-Pacific revenue declined 6% year-on-year to US$130.6 million. Management lowered its fiscal 2026 revenue outlook to US$4.29 billion–US$4.32 billion from US$4.31 billion–US$4.35 billion, citing higher costs and softer CooperVision revenue expectations, but maintained adjusted EPS guidance of US$4.58–US$4.66.

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