Gold Rises, Buoyed by Likely Safe-Haven Demand Amid Global Trade Uncertainty
2339 GMT — Gold rises in the early Asian session, buoyed by likely safe-haven demand amid global trade uncertainty. The lack of a clear timeline for U.S.-China trade negotiations continues to maintain investors' cautiousness, GivTrade's Hassan Fawaz says in an email. Also, the ECB's recent rate cut could enhance the precious metal's allure in a low-yield environment, the chairman and founder says. Focus for this will likely to be on U.S. macroeconomic data and any new developments on the trade front, Fawaz adds. Spot gold is 0.6% higher at $3,347.33/oz. (ronnie.harui@wsj.com)

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While gross margins improved to 58.3% thanks to lower production costs, operating margins slipped 110 basis points to 18.5%, highlighting mounting pressure on profitability. Additionally, comparable store sales grew just 1%, with a 2% decline in the Americas—a concerning trend for the brand's largest market. Notably, it's not just the top-line numbers that tell the story. Lululemon's inventory levels increased 23% versus planned high-teens growth. More and more of its products are collecting dust on its shelves. This could signal demand softness. Lululemon has struggled in the past with its women's apparel aligning with ever-changing trends. How Tariffs Impact the Canadian Apparel Company Though based in Vancouver, Canada, Lululemon is still exposed to the impact of President Trump's tariffs. Like many apparel retailers, the company relies on Asian manufacturing partners in countries such as Vietnam and Indonesia, importing finished goods into key markets, particularly the U.S., which remains its largest. As a result, the renewed import levies are a significant factor behind the company's downward revision to its earnings guidance. Regardless of the troubles the company faces on a macro level, its store count continues to rise as expansion beckons. LULU's Pricing Strategy Faces Risks Amid Consumer Budget Sensitivity Lululemon plans to implement targeted price increases on a select group of products. While this strategy can help support margins, it also carries the risk of dampening demand. After all, Lululemon isn't selling necessities—it's offering premium athletic apparel. In tougher financial climates, price-sensitive consumers may opt to delay purchases or explore more affordable alternatives. 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Moreover, he noted that Lululemon's international comparable growth decelerated, 'raising questions about the growth algo from here.' Randal Konik from Jefferies has a Sell rating on LULU due to slowing growth and increasing competition. On the last point, he notes that the company's attempts to diversify its core offerings have 'not been well-received, leading to lower customer conversion rates.' Lululemon Faces Headwinds Beyond Tariffs Lululemon's challenges can't be attributed solely to President Trump's tariffs. Beyond the impact of import levies on profitability, the company's growth is showing signs of slowing, especially in mature domestic markets. Coupled with a premium valuation and a lowered guidance, these factors contributed to a staggering $8 billion loss in market value. Looking forward, Lululemon must navigate the ongoing tariff pressures alongside intense competition and an American economy marked by consumer uncertainty and inflation. 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