📈 Lululemon Stretches Profits

Good morning.

⚡ The Fast Five → Trump names Sacks Crypto and AI Czar, Ulta shares surge, Eli Lilly to invest $3B in plant expansion, Honda recalls 205,000 SUVs, Lululemon stock rises on profit beat

🔎 Market Trends → Equity Markets Retreat From Record Highs Ahead of Jobs Report; US Futures Hold Steady Ahead of Key Jobs Report

And now…

⏱️ Your 5-minute briefing for Friday, December 6, 2024:

MARKET BRIEF
Before the Open

Pre-Market

Fear & Greed

Markets in Review

Stocks Slide but Stay in Bull Territory Ahead of Jobs Report

The Dow fell 0.6% to close at 44,765.7, while the S&P 500 and Nasdaq dipped 0.2% to 6,075.1 and 19,700.3, respectively. Materials led the declines, while consumer discretionary showed strength.

The Big Picture:

Investors took a breather Thursday after markets hit record highs, with traders locking in gains ahead of Friday's jobs report. Weekly unemployment claims ticked up, but continuing claims fell—a mixed signal on the labor front.

Oil (WTI) held steady at $68.52/barrel as OPEC+ extended production cuts, signaling tighter supply in 2024. Gold slipped 0.8% to $2,654.80/oz, and silver dropped 0.4% to $31.80/oz, reflecting muted safe-haven demand.

Market Movers:

• Synopsys (SNPS): Plunged -12.4%, despite beating earnings estimates. A weak revenue outlook rattled investors.

• Uber (UBER): Slid -9.6% after management flagged cost pressures, adding fuel to profitability concerns.

• Brown-Forman (BF.A): Surged +11.7%, leading the S&P 500 after reiterating a bullish full-year outlook and solidifying its spirits dominance.

• Tesla (TSLA): Gained +3.2%, buoyed by a price target upgrade from BofA Securities, reinforcing bullish sentiment on the EV giant.

What They’re Saying:

"The jobs report is the wild card. If the numbers exceed expectations, it could reignite concerns about rate hikes, but for now, the market seems to be pricing in steady growth," said a senior analyst at Oxford Economics.

WHAT WE’RE WATCHING
Events

• Today: Bur. of Labor Statistics - Average Hourly Earnings m/m - 8:30am

• Why You Should Care: It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer.

• Today: Bur. of Labor Statistics - Non-Farm Payrolls - 8:30am

• Why You Should Care: Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.

• Today: Bur. of Labor Statistics - Jobless Rate - 8:30am

• Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.

Earnings Reports

• Today: Genesco, Nebius, BRP, Soho House

• Monday: Oracle, BHP, MongoDB, Toll Brothers, Casey’s General Stores

MARKET BRIEF
Leading News

Lululemon Stretches Profits While International Sales Shine

Why it matters:

Lululemon's (LULU) international growth is surging—up 33% year-over-year—as U.S. sales slow. The company's agility abroad is helping offset challenges in its core market, keeping it a growth story in athletic apparel.

Zoom Out:

The athleisure powerhouse crushed Wall Street’s expectations in Q3, with earnings per share (EPS) of $2.87 beating forecasts of $2.69, and revenue climbing to $2.40 billion—a solid 9% increase.

While sales in the Americas rose just 2%, international revenue soared, led by China, where Lululemon is building significant momentum. However, challenges in its U.S. market—ranging from competition to inventory missteps—underscore the brand’s reliance on its home turf, which still generates the majority of revenue.

CEO Calvin McDonald remains bullish but cautious about holiday sales, noting a shorter shopping season and persistent economic uncertainty

Deep Dive:

• Gross margin: Climbed to 58.5%, exceeding expectations of 57.5%, signaling improving profitability.

• Holiday forecast: Revenue guidance of $3.48B-$3.51B, reflecting 8-10% growth from last year.

• Competitive landscape: Rivals like Vuori and Alo Yoga are chipping away at Lululemon’s U.S. dominance, but its international growth suggests untapped potential remains.

• Innovation pivot: New product structures and improved assortments aim to recapture U.S. momentum. Seasonal colors and fresh styles boosted conversion rates in Q3.

• Capital strategy: Lululemon’s $1.8B stock repurchase program is cushioning investor sentiment amid market headwinds.

Market Pulse:

“Lululemon’s quick recovery in product offerings underlines its ability to adapt,” says Neil Saunders, managing director at GlobalData. “This reinforces its position as a merchant-led organization.”

Bull’s Take:

Lululemon’s international growth story is just beginning, with China leading the charge. While U.S. sales face hurdles, improved product launches and strong holiday demand could reignite domestic growth. For investors, LULU’s expanding margins and robust buyback program make it a compelling long-term play.

Headlines

• Key members of OPEC+ alliance are putting off production increases amid slack crude prices (link)

• Ulta Shares Surge on Strong Sales Despite Discount Fears (link)

• Why Uber Technologies Plunged Today (link)

• Eli Lilly to invest $3B in expansion of Wisconsin plant (link)

• Honda to recall over 205,000 US SUVs over fuel leak concern, NHTSA says (link)

• American Airlines Stock Surges on New, Exclusive Credit Card Deal With Citi (link)

CRYPTO
Fear & Greed

Headlines

• Trump says venture capitalist David Sacks will be AI and crypto ‘czar’ (link)

• Bitcoin Crashed Below $94K in Sudden Plunge From Record Perch Around $100K (link)

• Hawk Tuah Girl’s Crypto Team Short on Answers After Disastrous Meme Coin Bust (link)

DAILY SHARE
On the Socials