What Happened?
Shares of athletic apparel retailer Lululemon (NASDAQ:LULU) jumped 18.4% in the afternoon session after the company reported strong third-quarter results, which surpassed analysts' revenue expectations on a convincing same-store sales beat. The result revealed strong double-digit top-line growth in China and the rest of the World. The company also observed record engagement metrics at the top of the funnel during the Black Friday event mostly from its online channels. This signals a strong start to the holiday shopping season. Looking ahead, guidance was roughly in line, which is encouraging. Overall, this quarter had some key positives.
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What The Market Is Telling Us
Lululemon’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Lululemon and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 5.2% on the news that data from Adobe Analytics, which tracks retail transactions, revealed that shoppers spent a record $10.8 billion online on Black Friday (2024), representing more than a 10% growth compared to the previous year, and more than double what consumers spent in 2017. This is a bullish 'read-through' for retailers and aligns with some of the positive sentiments and holiday spending trends observed by some of the companies that have reported this earnings season.
Lululemon is down 19.3% since the beginning of the year, and at $407.82 per share, it is trading 20.2% below its 52-week high of $511.29 from December 2023. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at an investment worth $1,778.
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