Traders reevaluate retail sector after Lululemon's weak sales growth

Retail misses: 4 ways to trade bad earnings

The "Fast Money" traders debated what Lululemon's weak sales growth means for the retail sector.

But the same-store sales for the Canadian yoga wear retailer disappointed, rising just 4 percent on a constant-currency basis. Analysts had anticipated a 5.8 percent uptick in this metric, according to FactSet.

Karen Finerman said Lululemon is a great company, but the valuation is relatively high compared to other companies in the space like Foot Locker.

"This wasn't a horrific earnings report. It was just priced for perfection and they didn't have perfection. They did have some bright spots. They also had some not so bright spots, but I think you have to wait. Let it shake out a little bit," she said.

Trader Brian Kelly said that one problem for Lululemon is that the athleisure market is "incredibly competitive." He said he'd be cautious of investing in a company like Under Armour, even though he would never bet against CEO Kevin Plank.

Trader Dan Nathan said that Lululemon's disappointment is just the latest in recent weakness in retail numbers. He said this may be a sign that "the U.S. consumer may not be as strong as the Fed would like it to be."

— CNBC's Krystina Gustafson contributed to this report.



Steve Grasso is long BA, CC, EVGN, KBH, MJNA, MU, OLN, PFE, PHM, T, TWTR, GDX Grasso's Kids Own EFA, EFG, EWJ, IJR, SPY. No shorts. Stuart Frankel & Co Inc. and some of its Partners have a financial interest in LDP, WDR, AVP, CVX, FCX, ICE, KDUS, KO, MAT, MCD, MJNA, NE, NEM, OLN, OXY, RIG, STAG, TAXI, TEX, TITXF, URI, VALE, WDR, WYNN, ZNGA, CUBA, HSPO, ICE, AMZN, MJNA, TITXF, NXTD, SPY, QQQ, DIA, XLI, BGCP, VIRT, JCP, GE, AIR FP


Karen Finerman is long AAL, BAC, C, DAL, DRII, DRII calls, FB, FL, GOGO, GOOG, GOOGL, JPM, LYV, KORS, KORS calls, KORS puts, M, MA, SEDG, SPY puts, UAL, URI, WIFI long call spreads. Her firm is long ANTM, AAPL, BAC, C, C calls, DRII, DRII calls, FB, GOOG, GOOGL, JPM, JPM calls, KORS, LYV, M, MOH, PLCE, SPY puts, URI, WIFI. Her firm is short IWM, MDY. Finerman is on the board of GrafTech International.


Brian Kelly is long Bitcoin, CME, DXJ, GDX, KBE, SLV, TLT, VXX, XLF, XOP, US Dollar UUP. He is short the euro and Japanese yen.


Dan Nathan is long TWTR, IWM long Sept put, long PYPL call calendar, XOP Sept put spread, BAC long Sept put, long FEZ Nov put spread, long EEM Nov put spread, long FB Sept put spread