Lululemon Athletica Inc (NASDAQ:LULU) are down 18.1% to trade at $168.76 at last check, after the company topped second-quarter earnings expectations but fell short on revenue. Tariffs are hitting the athleisure giant hard, with an estimated impact of roughly $240 million. Same-store sales struggled as well, prompting the retailer to cut its fiscal third-quarter and full-year guidance.
The security is on track for its worst day since June 6, backtracking yesterday's gains and pacing for a third monthly loss in four. The stock is down 55.7% year to date, with support at the $170 level faltering and suggesting further losses could be on the table.
At least 15 firms either downgraded or lowered their price targets on the stock, including UBS with a price-target cut to $184 from $240 and Stifel with a downgrade to "hold" from "buy." Coming into today, 17 of the 31 analysts covering the equity sported a tepid "hold" or worse rating.
Options traders are chiming in, with 176,000 calls and 172,000 puts traded so far today, which is 10 times the typical volume seen at this point. The weekly 9/5 165-strike put is outpacing other contracts, with open positions opening there.
The stock's 50-day call/put volume ratio of 1.64 at the International Securities (ISE), Cboe Options (CBOE) and NASDAQ OMX PHLX (PHLX) sits in the 95th percentile of annual readings. A further unwinding of this optimism could create additional headwinds for the shares.
It's also worth mentioning that the equity has tended to outperform volatility expectations over the past year, as suggested by its Schaeffer's Volatility Scorecard (SVS) of 98 out of 100.
