Nike, Lululemon Signal Deeper Economic Issues on the Horizon

These stark warnings surprised us – and the world... [Derby City Daily logo]( [Derby City Daily logo]( March 27, 2024 [Nike, Lululemon Signal Deeper Economic Issues on the Horizon]( By Andy Swan Between 2019 and 2023, the luxury industry thrived, growing nearly 30% during those four years, even in the face of a global pandemic and sky-high inflation. Retailers targeting “high-end” consumers stood resilient. Brands like [Abercrombie & Fitch (ANF)]( and [Ralph Lauren (RL)]( surged back to life. But Nike (NKE) and Lululemon (LULU) recently reported financial results that suggest bigger economic troubles could be on the horizon – not just for retail, but for the consumer in general, and perhaps even the overall economy. RECOMMENDED LINK [A.I. Expert Warns Investors: “Make or break moment for 2024 election year”]( But NOT for the reasons you think. This has nothing to do with a third party candidate... Or a potential government shutdown. But it does involve the federal government. (And most shockingly, it involves A.I.) It’s why A.I. expert Luke Lango is holding an urgent A.I. briefing on Wednesday, March 27th, at 8 pm ET. [Click here now to see how to secure your spot because...]( You could have a chance to see 6,000% profit potential. Luxury Retailers Sound the Alarm Nike's latest report shows strong sales, especially in North America – which saw 3% sales growth to $5.07 billion for the quarter ended February 29, 2024. But it's not all good news. The company is facing pressure on its profit margins, warning that revenue could shrink in the first half of FY25 – hinting at deeper issues like rising costs and economic uncertainty. Even with a spike in demand, the struggle to maintain profitability is becoming apparent. Lululemon, known for its high-end athletic wear, also sent a jolt through the market last week with a stark warning about falling profit margins and slowing sales in 2024. The company otherwise delivered a strong quarter – net revenue grew 16% to $3.2 billion, comparable sales increased 12%, and gross profit was up 25% to $1.9 billion. But now, even this retailer is feeling the pinch, facing the same challenges as others: excess stock and the need for more discounts. "As you’ve heard from others in our industry, there has been a shift in the U.S. consumer behavior of late and we’re navigating what has been a slower start to the year in this market," explained Calvin McDonald, CEO of Lululemon. This shift is worrying because Lululemon has been a symbol of strength in the retail sector, catering to wealthier consumers. LULU shares plummeted 19% from $478.84 as of market close on March 21 to a low of $387.11 on March 22, the day following the report. RECOMMENDED LINK [The Hershey’s Bar Indicator Is Crashing...]( In 1913, one dollar bought 30 Hershey’s Bars. Today, one dollar can’t even buy a single Hershey’s Bar. With over 96% of the dollar’s purchasing power gone, any further decline could trigger a full-scale currency crisis. Can your wealth survive a dollar collapse? [Click here before it’s too late]( The Bottom Line These stories from Nike and Lululemon might be early signs of wider economic challenges. Both companies are staples in the retail world, and their struggles suggest that consumers across the board might be tightening their belts. If these trends continue, we could be looking at a downturn that affects much more than just the retail sector. Members, as always, will be the first to know when it’s time to take profits – and [where the next big opportunities lie](. 📊 Bonus Insight: Sizing up the Sneaker Competition Here's a powerful chart derived straight from the LikeFolio Data Engine: This [Outlier Grid]( plots Consumer Happiness (higher is better) against web traffic growth (more right is more growth). Dot size represents volume of web traffic. NKE’s dot might be the biggest, but [ONON (On Holding)]( is the one to pay attention to here. We love seeing small dots on the upper right corner of Outlier Grids because it means happy customers and fast demand growth from a small company – generally indicating a high-potential small-cap investment opportunity. By the looks of it, ONON is in perfect position to steal market share. Enjoy. Until next time, [Andy Swan's signature] [Andy Swan's signature] Andy Swan Founder, LikeFolio Discover More Free Insights from Derby City Daily Here's what you may have missed from Derby City Daily this week... ✓ [4 Reasons Meta’s 400% Rally Isn’t Over]( ✓ [What to Know About Reddit’s IPO: The Inside Scoop]( ✓ [Add These Stocks to Your Radar Before Major Catalysts Hit]( Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [How A.I. 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