What Happened:

Shares of athletic apparel and accessories retailer Lululemon (NASDAQ:LULU) fell 18.9% in the morning session after the company reported fourth-quarter results and provided full-year revenue and earnings guidance, which fell short of Wall Street's estimates. On the other hand, Lululemon slightly topped analysts' revenue and EPS expectations during the quarter. The company's growth was driven by a 12% increase in its same-store sales, with American stores growing 7% and international stores growing 44% on a constant currency basis. Overall, it was a weaker quarter for Lululemon.

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What is the market telling us:

Lululemon's shares are somewhat volatile and over the last year have had 6 moves greater than 5%. But moves this big are very rare even for Lululemon and that is indicating to us that this news had a significant impact on the market's perception of the business.

Lululemon is down 19.8% since the beginning of the year, and at $405.96 per share it is trading 20.6% below its 52-week high of $511.29 from December 2023. Investors who bought $1,000 worth of Lululemon's shares 5 years ago would now be looking at an investment worth $2,832.

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