Why Lululemon and Sonic Gained While the Dow Was Flat

Stocks ended nearly flat today as underwhelming economic data out of the Euro zone mixed with stronger reports back home, and last week's rally fizzled out. By the end of the session, the Dow Jones Industrial Average  (DJINDICES: ^DJI  ) was down 0.06%, or 10 points. The S&P 500 lost 0.01% and the Nasdaq ended 0.01% higher.

In Europe, a purchasing managers' index showed growth in the manufacturing sector slowing, but economic data was stronger domestically as a preliminary PMI report from Markit showed the index reaching 57.5, its highest level since May 2010 and better than estimates at 56.5. Elsewhere, housing data released today was promising as existing home sales climbed from a seasonally adjusted annual rate of 4.66 million to 4.89 million last month, topping expectations of 4.8 million. Housing reports have been erratic lately as some investors have been concerned about a waning recovery, today's report represents the biggest monthly increase in the key category since August 2011, indicating home-buying may be picking up.

Also, lululemon athletica  (NASDAQ: LULU  ) shares were gaining steam today, climbing 2.5% as Founder Chip Wilson has enlisted Goldman Sachs in an attempt to further shake up the company. Wilson had criticized the company's board less than two weeks ago, and said he voted against the yogawear retailer's chairman and another director in recent board elections, accusing them of a short-term strategy. According to The Wall Street Journal, Wilson could initiate a proxy fight or team up with a private equity firm to take the company private. The founder was forced out of the chairmanship after he made unseemly comments about women's bodies last year, but still remains the company's biggest shareholder with 27% of the stock. Shares of Lululemon have fallen by more than 50% since last summer as a string of unfortunate events has shaken up the company, beginning with a product recall and ending with a reduced earnings forecast in its earnings report two weeks ago. At this point, Wilson's machinations seem like a potential savior for the once high-flying stock that has beaten so far down. 

After hours today, shares of Sonic Corporation  (NASDAQ: SONC  ) edged up 2% after the burger chain beat estimates in its quarterly report. Sonic posted a per-share profit of $0.30, beating estimates by a penny, while revenue improved 3.8% to $152.2 million, ahead of expectations at $148.6 million. The restaurant chain delivered an impressive same-store sales increase of 5.3%, and CEO Clifford Hudson credited the strong quarter on innovation products, a solid promotional strategy, and "increased media efficiency." For the full year, Sonic expects EPS growth of 14% to 15% and same-store sales growth in the low single digits. The bottom-line guidance was essentially in line with analysts, who expect full-year profits to grow from $0.72 to $0.83 a share. 

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

9/4/2015 4:30 PM
^DJI $16102.38 Down -272.38 -1.66%
LULU $65.68 Up +0.73 +1.12%
Lululemon Athletic… CAPS Rating: ***
SONC $27.31 Down -0.03 -0.11%
Sonic Corp CAPS Rating: **