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- 💰 Lululemon Disappoints Wall Street
💰 Lululemon Disappoints Wall Street
PLUS: Why is Kenvue stock falling?
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Market Performance
S&P 500: 6,481.50 ⬇️ 0.32%
Nasdaq: 21,700.39 ⬇️ 0.03%
Dow Jones: 45,400.86 ⬇️ 0.48%
Lululemon's Tariff Reality Check
Lululemon (LULU) shares plunged 20% after it delivered a brutal full-year outlook, highlighting how Trump's tariffs are hitting consumer brands where it hurts most.
The athletic apparel giant slashed its full-year earnings guidance to $12.77-$12.97 per share, well below Wall Street's $14.45 expectation.
Revenue guidance also took a hit, dropping to $10.85-$11 billion, compared to the expected $11.18 billion. The culprit? A staggering $240 million tariff impact on profits.
CEO Calvin McDonald didn't mince words: "We are facing yet another shift today within the industry related to tariffs and the cost of doing business."
The removal of the de minimis exemption alone accounts for 1.7 percentage points of the 2.2 percentage-point decline in tariff-related profit.
But tariffs aren't Lululemon's only problem. Same-store sales in the Americas declined 4%, and the company acknowledged that its product offerings have become "stale" and "too predictable."
McDonald acknowledged they've let product lifecycles "run too long," particularly in lounge and social categories.
Lululemon is a retail stock and has a Ziggma score of 100. Does the ongoing pullback make it more attractive?
Our Takeaway
This earnings report is a canary in the coal mine for consumer discretionary stocks.
Lululemon's dual challenge of tariff headwinds and product fatigue signals broader struggles ahead for retail brands heavily reliant on international supply chains and discretionary spending.
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Market Overview
Stocks closed lower on Friday, despite hitting fresh intraday highs earlier, as a disappointing jobs report sparked conflicting emotions about the state of the economy versus Federal Reserve policy.
The economy added just 22,000 jobs in August, significantly below the expected 75,000, and pushed the unemployment rate to 4.3%.
The weak employment data virtually guaranteed a Fed rate cut this month, with traders even pricing in a potential half-point reduction.
However, the concerning labor market trends, including the first job loss revision since the pandemic for June, raised new recession fears among investors.
JPMorgan and Wells Fargo led the retreat on concerns that a slowing economy could damage loan growth.
Industrials like Boeing and GE Aerospace also fell as economic uncertainty threatens order volumes.
The disconnect between rate cut optimism and recession worries created a volatile session in the market, with all three major indices giving up earlier gains despite reaching new highs.
Treasury yields provided some relief, with the 10-year falling to 4.082%, its lowest since April, as bond investors bet on aggressive Fed easing ahead.
Stock Moves Deciphered 📈
Enphase Energy (ENPH) rose 8.6% on expanded US solar incentives and new product announcements. Strong insider confidence and outperformance versus competitors reflected positive momentum in the renewable energy sector.
Micron Technology (MU) climbed 6% due to high demand for memory chips in the booming AI sector. AI spending and the adoption of high-bandwidth memory continue to reshape semiconductor market dynamics.
Advanced Micro Devices (AMD) declined after Seaport Research downgraded the chip stock from "Buy" to "Hold," citing concerns about slowing demand. Mixed AI division signals and export restrictions weighed on sentiment.
Headlines You Can't Miss
📈 30 S&P 500 stocks hit new 52-week highs, including Alphabet, Goldman Sachs, and Morgan Stanley, reaching all-time levels.
✈️ Airline stocks surged as Trump administration reportedly cancels Biden-era passenger compensation rules for delays and cancellations.
🏦 Wells Fargo raised American Express' price target to $375, citing the upcoming refresh of the Platinum card and the company's leadership in the premium segment.
📊 Russell 2000 on track for fifth straight winning week, gaining 0.8% despite underperforming larger indices year-to-date.
🏠 Quanex Building Products dropped 13% on weaker Q3 earnings and trimmed 2025 guidance for solar parts manufacturer.
🥫 Campbell's stock continued to climb 3% following Wednesday's earnings beat, up nearly 6% for the week despite tariff headwinds.
👞 Caleres jumped 9% after the parent company of Dr. Scholl's reported mixed Q2 results, recovering from a decline on Thursday.
Trending Stocks
Broadcom (AVGO)
The chipmaker surged 9.4% after crushing Q3 expectations with $15.59 billion in revenue. AI-related revenue jumped 63%, highlighting Broadcom's growing dominance in artificial intelligence semiconductors.
The company guided Q4 revenue to $17.4 billion, above the $17.02 billion consensus, as demand for custom AI chips accelerates.
Kenvue (KVUE)
Shares tumbled 11% after The Wall Street Journal reported that Health Secretary Robert F. Kennedy Jr. plans to link autism to Tylenol use during pregnancy in an upcoming HHS report.
The announcement threatens the core Tylenol franchise and raises regulatory risks for the consumer healthcare giant's most significant revenue driver.
DocuSign (DOCU)
The e-signature company rallied 5% following better-than-expected Q2 results. DocuSign earned $0.82 per share on $801 million in revenue, beating estimates of $0.84 per share and $780 million in revenue, respectively.
Strong guidance for Q3 and the full year suggests that digital transformation trends remain intact.
What’s Next?
Key Events to Watch 👇
September historically ranks as the worst month for equities, with the S&P 500 averaging 4.2% declines over the past five years.
Consumer discretionary stocks may face tariff impact assessments
Tech earnings focus shifts to AI infrastructure spending
Financial sector reports may reflect economic slowdown concerns
Inflation data next week is critical for the Fed rate cut magnitude
Bond market reaction to jobs weakness could pressure equities
Track upcoming news and earnings on your portfolio companies with Ziggma.
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