2 Retail Stocks to Watch Heading Into Memorial Day Week

TJX Companies stock historically underperforms during Memorial Day week, averaging a 1% decline over the past 10 years, a trend that may continue despite recent better-than-expected earnings; conversely, Lululemon stock tends to outperform during the same period, with an average gain of 4.8% and positive returns eight out of the last ten Memorial Day weeks, potentially pushing the stock to levels not seen since late March.

Analysis

Historical seasonality data for Memorial Day week presents contrasting outlooks for TJX Companies Inc (TJX) and Lululemon Athletica Inc (LULU). TJX has demonstrated a tendency to underperform, with positive closes in only three of the past ten Memorial Day weeks and an average decline of 1%. This trend appears to be commencing, as TJX shares were last seen down 2.4% at $131.75, retreating from a recent record high of $135.85, despite the company reporting better-than-expected first-quarter earnings and revenue, and reaffirming its fiscal 2026 guidance. A similar 1% decline this year would position TJX near $130. Conversely, Lululemon has historically outperformed during this period, ranking among the top five S&P 500 stocks. LULU has finished Memorial Day week higher in eight of the last ten years, averaging a 4.8% gain. Currently trading at $325.64 and down 14.7% year-to-date, a repeat of this historical performance could propel LULU towards $341.27, a level not observed since late March, potentially mitigating a portion of its recent losses.

Key Decisions for Investors

• Investors should consider the historical underperformance of TJX during Memorial Day week as a potential headwind, despite its recent strong fundamentals and record highs, which might warrant caution or tactical short-term bearish considerations.
• Lululemon's consistent seasonal strength during Memorial Day week, with an average gain of 4.8% and positive returns in 8 of the last 10 instances, may present a short-term tactical opportunity for bullish investors or those looking for a potential catalyst to reduce its year-to-date losses.
• Monitor TJX for a potential pullback towards the $130 level if historical trends persist, and observe LULU for a possible rally towards the $341.27 mark, based on its established seasonal outperformance.