NEW YORK, NY--(Marketwire -05/10/12)- Euro fears have caused many high-end retailers' shares to fall Tuesday. Recent election results in France and Greece have provided a potential road block for the region's plan for economic recovery. "Europe is a little shaken on (renewed) concerns that Greece may have to exit the euro and that could cause some psychological chaos which could hurt the luxury consumer," said Robin Lewis, CEO of The Robin Report and a professor at The Fashion Institute of Technology. Five Star Equities examines the outlook for companies in the Retail Sector and provides equity research on Fossil, Inc. (FOSL) and Lululemon Athletica Inc. (LULU).
The political chaos in Europe and weak economic data could lead to high-end consumers closing their wallets sooner rather than later. Recent results that fell short of analysts' expectations and concerns in Europe sent shares of accessory retailer Fossil plummeting, which caused a domino effect throughout the retail sector. "In Europe, a softening macro environment toward the end of the first quarter and changes in our merchandising and assortment strategies across certain categories negatively impacted both our wholesale and retail sales in that region," Fossil's CFO Mike Kovar said in the company's earnings release.
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Fossil is a global design, marketing and distribution company that specializes in consumer fashion accessories. Despite reporting a first quarter rise in profit and revenue of 4.2 percent and 9.8 percent respectively, shares of the company fell 37.5 percent Tuesday to close at 78.52. The company's 2012 EPS of $5.30-$5.40 fell short of analysts' expectations of $5.56. Fossil's shares before the selloff were up roughly 58 percent in 2012.
Lululemon Athletica is a designer and retailer of technical athletic apparel operating primarily in North America and Australia. Shares of the apparel company fell 3.04 percent in Tuesday trading. The Company ended fiscal 2011 with $409.4 million in cash and cash equivalents compared to $316.3 million at the end of fiscal 2010. Inventory at the end of fiscal 2011 totaled $104.1 million compared to $57.5 million at the end of fiscal 2010. The Company ended the quarter with 174 stores in North America and Australia.
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