Author: Carrie Luckner
Covestor model: Long-Short Hedged
Disclosure: Short LULU; Long X, SDS
As I noted in a commentary last week, I was nervous about being short Lululemon Athletica inc. (NASDAQ: LULU) ahead of earnings. On June 10th, the company announced a blow out first quarter EPS of $0.46, beating both whispers and consensus handily, and raised their full-year outlook. They continue to outperform other retailers on sales and margins, but I have to wonder if this is sustainable. With the market in the doldrums again, and looking to continue on this trajectory in the foreseeable future, I don’t see how LULU’s stock will be immune and I am using Friday’s move to short more.
In other trading, I sold a little ProShares UltraShort S&P500 ETF (NYSE: SDS) and covered my 2-day Visa (NYSE: V) short trade at a nice little profit. I’m also getting some much needed love on my very long US Steel (NYSE: X) position. Now all we need is a more than one day rally in financials… guess I’ll put it on my Christmas wish list.
Hopefully we’ll get some positive news on something, ANYTHING, this week, or we’re in for another bumpy ride.
LULU Earnings Press Release, 6/10/11. https://www.sec.gov/Archives/edgar/data/1397187/000095012311058109/c18593exv99w1.htm