Stock market news: SmileDirectClub fights against COVID-19; Lululemon is moving lower
The stock market fell sharply on Friday, failing to build on the momentum that sent many major market benchmarks up 20% or more from their lows. New concerns about the coronavirus pandemic have surfaced, and the threat that the $2 trillion stimulus bill will be delayed due to voting procedural requirements has also raised concerns among investors who had taken the taking the measure for granted. Starting at 11 a.m. EDT, the Dow Jones Industrial Average (^ DJI -0.42%) was down 848 points to 21,704. S&P500 (^GSPC 0.16%) fell 88 points to 2,542, and the Nasdaq Compound (^IXIC 1.75%) fell 267 points to 7,530.
The fight against the coronavirus has been far-reaching, and SmileDirectClub (SDC -3.70%) announced its intention to join the battle by making its own contribution. Meanwhile, lululemon athletic (LULU 7.69%) announced its latest financial results, and despite strong numbers for the last quarter, shareholders are worried about what the rest of 2020 may hold for the yoga apparel retailer.
Make healthcare professionals smile
Shares of SmileDirectClub rose 15% on Friday morning as investors applauded the change the company made in response to the COVID-19 outbreak. Even though the company specializes in dental aligners, SmileDirectClub tries to bring smiles to healthcare professionals outside of the dental profession.
SmileDirectClub has taken the 3D printing capabilities it typically uses to make clear aligners and retainers and redirected it to producing medical-grade face shields. Healthcare workers can use the shields to protect against catching COVID-19. A hospital complex in Boise, the capital of Idaho, will receive the first shipment of 1,000 face shields from SmileDirectClub. Additionally, the dental specialist is making reusable breathing masks to help tackle shortages in key areas.
The company plans to support healthcare workers throughout the pandemic. SmileDirectClub estimates it can use 3D printing to produce up to 7,500 face shields per day, and it takes orders from healthcare facilities and government entities across the United States and Canada. Since its manufacturing facilities are certified by the Food and Drug Administration, SmileDirectClub may also have the ability to manufacture other life-saving items, including testing supplies.
With millions of people struggling to make ends meet, SmileDirectClub could see a decline in its core dental alignment business. Responding to the most immediate needs during the coronavirus crisis, the health care company is both to do the right thing now and to elicit goodwill from potential customers in the future.
lululemon is heading down
Somewhere else, lululemon athletica shares fell nearly 4%. The yoga apparel retailer released its fourth quarter financial results, but shareholders focused more on what the company doesn’t say about its immediate prospects.
Lululemon’s holiday quarter numbers were generally good. Sales for the period increased 20% over prior year levels, with comparable store sales increasing 9%. Direct-to-consumer revenue jumped an even more impressive 41% year over year. Earnings showed similar growth, up 23% from fourth quarter 2018 adjusted earnings figures. 17% of total comparable sales and growth of 28% adjusted earnings.
Yet, due to the impact of the coronavirus pandemic, lululemon has elected not to provide guidance for fiscal year 2020. The retailer has acknowledged temporary closures of all locations in North America, Europe, New Zealand and Malaysia, although it has reopened all but one of its stores. stores in mainland China after the outbreak there.
Investors seem to have some confidence in lululemon’s long-term prospects, as the stock’s decline is only marginally worse than the overall market today. If life returns to normal in the near future, then lululemon will be in a better position than many to enjoy it.