Diamonds and Dogs

3/6/15

Foot Locker (FL) is kicking butt as better than expected sales and earnings sent the stock soaring 4% to new all-time highs.  The athletic-wear retailer said comparable store sales surged 10.2% in the quarter as net income rose 25% to $146 million, or $1.01 per share. Excluding items, net income came in at dollar share beating estimates of 91 cents. Total sales in the quarter increased 6.7% to $1.91 billion, also beating consensus estimates of $1.87 billion. Shoes, particularly for basketball and running, continue to drive sales thanks to the popularity of the Jordan Brand. It's a good time to be Michael Jordan as he joined the rare list of billionaires in the world thanks to his Nike shoes and apparel business.

Lululemon Athletica (LULU) was certainly a lemon today as the stocked dropped 4% on a downgrade. The Canada-based Lululemon offers a range of yoga-inspired performance apparel and accessories for women, men and female youth such as fitness pants, but Goldman Sachs downgraded the stock today with a sell rating and a $52 price target, $10 below current levels. The analyst at Goldman sees increased competition, a devaluation of the Canadian dollar, and overvaluation hurting fundamentals and the stock price going forward. At least Montana will still allow citizens to wear yoga pants.