Lululemon Stock Flops After Nike News. Why It Could Be a Great Time to Buy

(NYSE: NKE) reports quarterly earnings on a different schedule than most public companies, and its updates often give the market a sense of what's happening in retail before they get other earnings announcements. Because Nike plays such a strong role on the retail scene, its performance can be a harbinger of what's to come. For example, at the end of 2021, it was Nike that gave some of the earliest indications of the supply chain crisis that ended up afflicting retailers and shaking up the economy.

So it comes as no surprise that after a concerning report from Nike at the end of June, investors have become pessimistic about other companies as well. Lululemon Athletica (NASDAQ: LULU), one of Nike's main challengers over the past few years, has demonstrated resilience and hasn't changed its outlook, but its stock has plunged 17% since Nike's update. Is there anything to be concerned about? Or is Lululemon stock flashing a big buy signal?

Nike's update for the 2024 fiscal fourth quarter (ended May 31) had two sides. One was negative news relating to its own business, and the other was negative news related to retail in general. Most of its problems related to its own business, but management cited "macro uncertainty" as a continuing issue. Nike has been particularly impacted by ongoing pandemic-driven problems in China, where it had high promotional activity to sell off inventory. It has a broad strategy targeting several areas to generate higher sales and expand its margins.

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Source Fool.com