The Situation

Lululemon Athletica Inc (NASDAQ: LULU) shares – a Canadian multinational athletic apparel retail – plunged on Friday after news that it had $1.7 billion worth of unsold merchandise. As of 12:00 PM ET, Lululemon shares dropped 12.27%.

The Explanation

Lululemon officially went public on July 2007 and reached its all-time high on Nov 16, 2021, at $477.91. The company's shares are only down by 14.96% year-to-date compared to the S&P's drop of 17.45%. So far, the company is still up by 2,254.25% overall.

The company announced that it had $1.7 billion of unsold inventory despite the recent Black Friday sale and the upcoming holiday sale. This is an 85% increase in unsold merchandise compared to the year before.

See the $LULU chart performance here.

The Effect

Lululemon stock reported losses after it had a massive unsold inventory. The investor's reaction happened despite beating analysts' estimates of $1.81 billion for its quarterly sales at $1.86 billion.

Since investors can't know for sure whether the company will hit it will offload the remaining inventory, it is more important to focus on Lululemon's business. The company estimates it will be left with only 39% of unsold merchandise by the end of the new quarter.

See full $LULU flow at: https://unusualwhales.com/stock/LULU/flow-overview