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Yiwen Lu

Super Micro tumbles on lower guidance, further delay in filing

The embattled semiconductor company Super Micro Computer cut guidance for its first-quarter earnings and said that it “remains unable at this time to predict” when it will be able to file its annual report. Shares of Super Micro fell over 13% in after-hours trading.

In a press release, Super Micro announced preliminary results for the first quarter of 2025. The company expected net sales for the quarter to be $5.9 billion to $6 billion, down from a previous guidance of $6 billion to $7 billion. Analysts were expecting an average of $6.4 billion, according to FactSet. 

The company also lowered the upper end of expected earnings per share. It is now expecting non-GAAP earnings per share to be between $0.75 to $0.76, instead of previous guidance of $0.67 to $0.83. Wall Street expected $0.73.

Super Micro “continues to work diligently on matters related to the Form 10-K for the fiscal year ended June 30, 2024,” the company said. The annual filing was due on August 29, 2024 but Super Micro said it was not able to file the report on time. This followed a short-seller’s report alleging accounting irregularities, questionable governance, and sanctions evasion at Super Micro. Just last month, auditor Ernst & Young resigned, dragging shares down as much as 30%. 

However, Super Micro said in the release that an independent committee of its board of directors had completed an investigation based on EY’s concerns, which revealed “no evidence of fraud or misconduct.”

In a call with investors, Super Micro CEO Charles Liang said he was confident the challenges would not affect the company’s ability to serve its customers.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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