What Happened?
A number of stocks fell in the morning session after consumer discretionary stocks pulled back, led by a plunge in Lululemon as the company cut its full-year revenue guidance to $11.0–$11.15 billion from $11.35–$11.5 billion, citing weaker US consumer traffic, brand backlash on social media, and underperforming product launches.
The sector-wide pressure came from the jobs data. May payrolls of 172,000, more than double the 80,000 consensus, pushed rate hike expectations into view and raised the cost of consumer borrowing.
For discretionary names, the risk compounds: elevated oil prices from the Iran conflict are eroding household budgets, real borrowing costs remain high, and Lululemon's explicit guidance cut on weaker customer engagement provides a live signal that US consumers are becoming more selective. Stocks that already carried elevated valuations were most exposed.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Consumer Discretionary - Apparel and Accessories company Stitch Fix (NASDAQ: SFIX) fell 5.4%. Is now the time to buy Stitch Fix? Access our full analysis report here, it’s free.
- Consumer Discretionary - Media company fuboTV (NYSE: FUBO) fell 4.4%. Is now the time to buy fuboTV? Access our full analysis report here, it’s free.
- Consumer Discretionary - Travel and Vacation Providers company Sabre (NASDAQ: SABR) fell 3.8%. Is now the time to buy Sabre? Access our full analysis report here, it’s free.
Zooming In On Stitch Fix (SFIX)
Stitch Fix’s shares are extremely volatile and have had 41 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock dropped 2.7% on the news that oil prices approaching $98 per barrel renewed inflation concerns and reduced expectations for near-term interest rate relief.
Higher crude translates directly into elevated jet fuel costs for airlines, higher logistics costs for retailers, and compressed household budgets. The sector's core exposure to energy is both operational and demand-side. The market now prices in modest rate hikes rather than cuts for 2026, meaning the mortgage and credit conditions that support big-ticket discretionary spending remain strained.
The sector's weakness was not uniform: Macy's rose after reporting its best first-quarter comparable sales performance in four years and raising full-year guidance before pulling pack during the day. But travel-linked and fuel-intensive names bore the brunt of the oil move. The pattern reflects a market navigating resilient consumer demand on one side and rising cost pressures and rate uncertainty on the other.
Stitch Fix is down 31.7% since the beginning of the year, and at $3.50 per share, it is trading 40% below its 52-week high of $5.83 from September 2025. Investors who bought $1,000 worth of Stitch Fix’s shares 5 years ago would now be looking at only $60.37.
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