2 Retail Stocks Making Sharp Moves After Earnings

LULU is finally in rally mode, while Five Below stock digs deeper into the red

Next week, retail sales for last month are due out. Today, two retail stocks are staging opposite post-earnings swings after the company’s respective earnings reports.  Athleisure icon Lululemon Athletica Inc (NASDAQ:LULU) is one of the best stocks on Wall Street today, while discount retailer Five Below Inc (NASDAQ:FIVE) is deep in the red.

LULU was last seen up 6.3% to trade at $327.81, on track for a third-straight win and best single-session pop since Oct. 16. The company’s first-quarter earnings and revenue exceeded expectations, prompting four bull notes, the highest from Stifel to $416 from $410. Second-quarter guidance is keeping the gains from going haywire, however, and explains the five price-target cuts from analysts this morning. Despite today’s gap higher, the shares are down 36% in 2024 and hit an annual low of $293.03 on May 28. 

It is worth noting, however, that Lululemon stock is historically one of the best stocks to own this month, going back 10 years.

At last check, over 220,000 options contracts have changed hands, volume that’s seven times the average intraday amount. The weekly 6/7 330-strike call is the most popular, followed by the 310-strike put from the same series, with new positions being bought to open at each.

FIVE was last seen down 12.1% to trade at $116.80, on track for its worst single-session decline since a 15.4% post-earnings drawdown on March 21. At least 12 brokerages have issued price-target cuts, the worst coming from Craig-Hallum to $124 from $187, after Five Below’s current-quarter guidance came in below estimates. The shares earlier hit a four-year low of $106.20, and are now down 45.1% for 2024.

The options pits are much more skewed toward puts, with 17,000 contracts exchanged so far today, volume that’s 24 times the average intraday amount. The July 100 put is the most popular by far, where sell-to-open activity is detected.

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