lululemon Stock Rips, Airplane Stocks Freak on Iraq Issues, and Retail Sales Not-so-Hot

Wall Street's busy buying up super high tickets to the NHL Stanley Cup Final games, while Brooklyn hipsters are flocking to random bars to watch the World Cup -- the two big events must partially be behind the market's recent tumble. Fresh after Wednesday's triple-digit loss, the Dow (^DJI 0.69%) dropped 110 points Thursday.
 

We'll spare you the lame "downward dog" yoga references, but lululemon (LULU 0.80%) dropped 15.9% Thursday after a mixed earnings report. Although revenue topped expectations, rising 11% from last year to $385 million in the first quarter, same-store sales slipped 4%. Even worse, Lulumon cut its full-year revenue forecasts from $1.82 billion to $1.8 billion.

Bad karma has been crushing the Lulu investor's lifestyle. Last year, the "see-through" Lululemon pants caused the company more than $60 million. Then, founder Chip Wilson had to step down last fall after some inappropriate comments -- there are actually a whole bunch -- about tight black pants and women's bodies. The combo hasn't looked good on the stock.

But Lulu-faithful are confident. New CEO Laurent Potdevin, formerly of TOM'S Shoes and Burton Snowboards, admitted that sales have been slower than expected. And the company's CFO just announced he's stepping down. But the company still plans to buyback $450 million in Lulu stock, which will increase the value of the stock for shareholders.

The takeaway is that Lulu is harnessing positive energy, and now plans a major international expansion. The company plans to stretch out and add 20 stores in Europe and Asia by the end of 2017, with its first in Hong Kong early next year. Plus, it will be opening 14 pop-up stores in North America to lure new shoppers.

2. Oil stocks celebrate, while airlines suffer from Iraqi violence

A sudden onslaught of sectarian violence between the Iraqi government and armed Kurdish rebels has rocked the Middle East-sensitive oil markets. Oh yeah... Iran sent elite military forces into the mix, too. Northern Iraqi cities are changing control between these warring forces like a real life Medal of Honor video game. With oil supplies threatened, the geo-political turbulence created Wall Street winners and losers.

Iraq is OPEC's second biggest oil producer, and this civil war could halt exports indefinitely. While the U.S. decides whether to send in the ol' fighter jets to eliminate the playing field, oil prices rose 2.4%, to nine-month highs Thursday. Oil and gas drilling companies loved the news, as their black gold is all the more precious to world energy markets.

Airlines took a beating, as increased oil prices could lead to higher fuel costs. Delta (DAL 0.43%) dove 5.4%, and Southwest Airlines (LUV -0.91%) sank 4.5% Thursday. Will these airlines raise ticket prices, reduce their profit margins, or stop giving out free peanuts (warning: these salted peanuts may contain peanut product)? All of these options don't fly with investors, so they fled airline stocks.

The number of the day is $437.65 billion. That may look damn big, but it represents only a 0.3% rise in retail sales in May, below the 0.7% increase economists were expecting. On the bright side, auto sales jumped an impressive 1.4% during the month, while building supply and garden store sales gained as Americans beautify their spring lawns.

 

The takeaway is that it's been a strange 2014 for retail sales. For the first few months of the year, that unseasonably brutal winter weather kept consumers at home, not consuming. Then, retail sales jumped 1.5% in March, indicating a rebound. But since then, consumer activity has surprisingly slowed in the spring, causing economists to lower their expectations about the second-quarter GDP reading.