Lulu's Big Day, America's Mixed GDP News, and Game Over for GameStop

Good mornin' good lookin'... Here are the three things you should know on Friday, March 28th:

Mar 28, 2014 at 6:00AM

You probably should have spent the week at "Extreme Beer Fest" in Boston -- because stocks just stumbled for the third day this week. Following some mixed news on America's GDP, the Dow  (DJINDICES:^DJI) dipped a meager four points Thursday.

U.S. Economy officially grows 1.9% in 2013
The year 2013 is in the books; mark it down. Use permanent marker. Get a tattoo if you want. Growth for the U.S. economy was 1.9% for all of 2013. The growth figure is official after the Commerce Department reported Thursday the third and final reading of the fourth-quarter Gross Domestic Product, which came in at 2.6%.

You want some perspective? The last two quarters of 2013 were damn good (4.1% and 2.6%). In the post-financial crisis world for developed countries, that streak of pretty strong growth is like Archie Griffin winning the Heisman trophy twice. Still, full-year growth of the country's total economic production (measured by the GDP) was modest, and 1.9% gets a "C-" from an historical perspective.

It's better than 2009, so we can celebrate. The year after the crisis, the economy shrank by -2.8%. Since then, the U.S. has grown at 2.5%, 1.8%, 2.8%, and 2.6% in the past four years. It's decent, but nothing like the 3+% growth in the 2000s, or the 4+% growth in the raging 1990s. Investors watch this number because a country's GDP is the first possible metric you can consider for a country's buying power, and buying is pretty darn important for U.S. stocks.

Lululemon's earnings surprise Wall Street
Forget the "downward dog," because the Canadian company that made yoga pants cool for non-hipsters reported fourth-quarter earnings from 2013 that surprised investors. Lululemon (NASDAQ:LULU) popped 6.2% Thursday on word that its sales in the all-important holiday period reached $521 million compared to the $517 million analysts were expecting -- a 7% increase from the same period in 2012.
 
Unfortunately, 2013 was not a pretty year for lululemon. Last May, the company produced see-through yoga pants that cost them more than $60 million in revenue. Then, the company's CEO stepped down after some not-so-nice comments about its female clientele's bodies. Investors were also impressed to hear that lululemon's full-year $1.6 billion in revenues were a 16% jump from 2012.
 
The takeaway is that 2014 is all about a fresh start and a clear mind. While announcing the earnings, lululemon execs spoke like they were addressing a Bikrim class in Brooklyn, referring to the company's "magic" built on "technical beautiful products" and "the emotional connection" the company creates. Namaste.
 
GameStop sales drop thanks to Internet downloads
We'll spare you the lame "Game Over" analogy that we're sure every other financial news source is printing. But the world's largest video game retailer, GameStop (NYSE:GME), dropped more than 4% Thursday on a bad earnings report and even worse financial projections, as profits fell from $261 million to $220 million last quarter.
 
The takeaway is that it's hard to be a brick and mortar store in sketchy malls across the country catering to overweight, couch-ridden dudes. Those lazy customers are increasingly more interested in just downloading video games. Plus, GameStop is facing growing competition from games bought on tablets and smartphones, in addition to its usual big-time competitors Amazon.com, Best Buy, and Wal-Mart.
 
Keep in mind that GameStop's growing product line has been its used video games, which has been its most profitable bread-and-butter area. Unfortunately for GameStop shareholders, Wal-Mart announced this month that it's going to start offering a trade-in used video game service, and Sony is building one so you can sell old games online.

Friday:

  • Reuters/UMich Consumer Sentiment poll for March
  • Will Candy Crush keep getting crushed?

MarketSnacks Fact of the Day:  One out of eight deaths globally are linked to air pollution.

As originally published on MarketSnacks.com

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Nick Martell has no position in any stocks mentioned. Jack Kramer has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica. The Motley Fool owns shares of GameStop. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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