What Happened?
Shares of athletic apparel retailer Lululemon (NASDAQ: LULU) jumped 4.1% in the morning session after positive results from peer retailer Dollar General pointed to resilience in consumer spending. Dollar General raised its full-year guidance after its net sales for the third quarter rose 4.6% to $10.6 billion. The company noted that the sales increase was driven by improved customer traffic. This positive report from a major retailer suggested that shoppers were still spending, which often creates optimism for other companies in the same sector, including apparel brands like Lululemon.
After the initial pop the shares cooled down to $189.71, up 3.2% from previous close.
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What Is The Market Telling Us
Lululemon’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock gained 3% on the news that an analyst at BTIG reiterated a "buy" rating on the stock ahead of its third-quarter earnings report. The BTIG analyst maintained the firm's recommendation and a $303 per share price target. The note suggested there was upside potential in the stock due to what was described as gloomy investor sentiment and low valuations. The research firm also noted it expected the company's upcoming third-quarter results to align with guidance. This positive sentiment was also reflected in the options market, where an unusual number of traders took a bullish stance on the athletic apparel company.
Lululemon is down 49% since the beginning of the year, and at $189.71 per share, it is trading 55% below its 52-week high of $421.16 from January 2025. Investors who bought $1,000 worth of Lululemon’s shares 5 years ago would now be looking at an investment worth $510.68.
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