NEW YORK, NY / ACCESSWIRE / August 22, 2017 / Lululemon investors cheered on Monday as the stock was upgraded to a "buy" at Bank of America Merrill Lynch. Shares of Nike however were not as lucky yesterday after Foot Locker's poor earnings release last week suggested that Nike may have some of the blame.

RDI Initiates Coverage on:

Lululemon Athletica Inc.
https://rdinvesting.com/news/?ticker=LULU

NIKE, Inc.
https://rdinvesting.com/news/?ticker=NKE

Lululemon Athletica Inc.'s shares closed up 2.25% on about 4.2 million shares traded on Monday. The share price jump was the result of Bank of America Merrill Lynch raising their rating on the company from "underperform" all the way to a "buy." The firm also raised its price target from $49 to $70. Analyst Rafe Jadrosich wrote to clients that the company is "gaining share from saturated competitors. We believe weakness in Nike and Under Armour North America apparel sales creates share gain opportunity for lululemon," he wrote in a note to clients. "Nike and Under Armour have suffered from a lack of innovation, over-distribution in moderate channels, and heavy promotions."

"Lululemon's fabric and product innovation appears robust, in our view," wrote Jadrosich. "We believe lulu will increase its assortment of Jacquard (specialized knitted and dyed nylon yarn that allows designers to form unique textured patterns), which will carry higher average selling prices and is difficult to replicate."

Access RDI's Lululemon Athletica Inc. Research Report at:
https://rdinvesting.com/news/?ticker=LULU

NIKE, Inc.'s shares closed in the red on Monday after Foot Locker turned in disappointing earnings results and cited a loss of demand for premium athletic footwear. Foot Locker was one of the biggest losers on the S&P 500 after releasing earnings results this past Friday. Analyst Christopher Svezia of Wedbush suggested Nike was a reason for Foot Locker's dismal results and wrote, "We are sticking with FL while lowering our PT and estimates to reflect current realities. Last year FL was generating positive mall traffic and in March and April, +HSD comps, so we don't feel this is a FL issue, but more of a product vacuum largely from Nike that is deeper than we expected. FL customers are not strictly defecting to branded DTC (Nike DTC slowed all last year, even ecommerce). We do contend that FL's revised comp guidance is attainable as it reflects continued promotional pressure, weaker sell-through of Jordan brand, offset by higher levels of stronger selling goods against a shrinking basketball business. The brands are also putting in place initiatives to improve speed to market and product relevance. While this may take longer than we initially expected to right itself, we firmly argue FL will benefit as the brands elevate product flow." Nike is expected to release its own results on September 28th. Shares of the stock closed down 2.46% yesterday on roughly 14.2 million shares traded.

Access RDI's NIKE, Inc. Research Report at:
https://rdinvesting.com/news/?ticker=NKE

Our Actionable Research on NIKE, Inc. (NYSE: NKE) and Lululemon Athletica Inc. (NASDAQ: LULU) downloaded free of charge at Research Driven Investing.

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