Lululemon Athletica (LULU) stock on Monday hit its highest level since December 2021 amid plans for the athleisure company to join the S&P 500 (^GSPC) index next week.
Prior to the market open on Oct. 18, Lululemon will replace game maker Activision Blizzard (ATVI), which recently finalized its merger with Microsoft (MSFT).
The Vancouver, Canada-based company's stock was up over 10%, hovering above $418 during the afternoon session.
Lululemon has had a strong year, despite weakness in the overall apparel industry. The company lifted its full-year forecast earlier this year. Its second quarter results came in better than Wall Street expectations, with net revenue increasing 18% year over year.
"I think what we're seeing here is a discerning consumer," Oppenheimer & Co. senior analyst Brian Nagel told Yahoo Finance after the company’s latest quarterly results.
"LULU performed well through the pandemic, right? But I think what's happening here post-pandemic is, as a society, we are still dressing a lot more casually, you know. So this ongoing strength in Lululemon — the double-digit sales growth — to a certain extent is coming at the expense of more traditional clothing companies," he added.
In late September, Lululemon said it had entered a five-year partnership with connected-fitness platform Peloton (PTON) for its content.
Lululemon will become the primary athletic apparel provider for Peloton, while some Peloton instructors will be Lululemon Ambassadors.
The company also said it planned to stop selling its connected fitness Mirror device, which it purchased for $500 million in June 2020 when valuations for at-home fitness equipment like Pelotons and Tonals were skyrocketing.
As Yahoo Finance’s Executive Editor Brian Sozzi recently pointed out, "Lululemon unsuccessfully attempted to integrate the Mirror acquisition operationally, culturally, and from a sales perspective."
Lululemon is up about 25% year to date. The stock has 27 Buy, six Hold, and three Sell analyst recommendations.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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