Please ensure Javascript is enabled for purposes of website accessibility

Why lululemon athletica Stock Gained 18% in April

By Demitri Kalogeropoulos – May 4, 2020 at 9:36AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The athleisure retailing business was booming before COVID-19 struck.

What happened

Its stores were closed, but lululemon athletica (LULU 5.38%) stock still outperformed a strong market last month. Shares rose 18% compared to a 13% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The stock remains lower on the year, but its 7% decline in 2020 to date is more modest than the broader market's slump.

So what

Like most of its peers, Lululemon's physical store footprint was closed across key markets last month. In April, the chain also announced the surprise departure of its chief financial officer, who is leaving to head up another retailer.

Yet investors have been more focused on its strong momentum heading into the pandemic, with sales, gross profit margin, and operating profit margin all improving markedly in fiscal 2019.

Now what

Lululemon's next earnings report, in the summer, will likely show a significant impact from COVID-19 and the related store closures. There should be bright spots in that report, too, including a booming e-commerce channel and sales rebounds in markets that have seen the virus threat fully pass.

The stock's returns from here will largely depend on whether investor optimism has been well placed, and whether world economies bounce back quickly from the recession that has been fueled by social distancing mandates.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lululemon Athletica. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lululemon Athletica Inc. Stock Quote
Lululemon Athletica Inc.
$307.80 (5.38%) $15.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.