Asian markets ended lower Thursday as deflation seems to be taking hold in China. Standard & Poor’s has cut Brazil’s credit rating to “junk” status and that led to European markets also dropping across the board.
In the U.S., Lululemon is down 8.9 percent to $58.30 after reporting its second-quarter earnings. Even though the company beat expectations, the forward guidance was a disappointment for investors. Lululemon delivered earnings of 34 cents a share, better than last year’s 33 cents a share and a penny better than consensus. Third-quarter profits were expected to be 42 cents a share, but Lululemon says it will be closer to 37 cents a share. The yoga-inspired chain did raise its full year earnings estimates by a penny to $1.92, but that is based on the hopes it will earn more in the fourth quarter.
Hudson’s Bay Company delivered its second-quarter results, as well. The company posted 15.2 percent sales growth to over $2 billion. The department store group’s same-store sales increased 4.2 percent and the Saks Fifth Avenue outlet stores’ same-store sales increased 12.7 percent. Net earnings came in at $67 million, a welcome jump over the loss of $36 million. Jerry Storch, HBC’s chief executive officer said in a statement, “Our second quarter was characterized by very strong sales growth, led by the increasing traction of our digital platforms.“
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Coach was moving higher by 1 percent to $29.39 after the company received an outperform rating on an initiation of coverage by RBC Capital. RBC believes the accessory brand is poised to return to growth as its brand transformation and restructuring initiatives begin to take hold. The analyst likes the price valuation since the stock has dropped 50 percent over the past 3 years and also delivers a 4.6 percent dividend.