Lululemon (LULU) released its third-quarter results after the closing bell on Thursday, which beat both the top and bottom results, sending the company's shares higher on Friday.
Lululemon shares rose more than 17% in early trading as the company also raised its full-year 2024 sales and profit guidance.
Still, sales growth in North America declined once again as the retailer grapples with concerns about increased competition heading into the critical holiday shopping period.
Revenue was $2.4 billion, up from the $2.2 billion reported in the third quarter of 2023. Analysts polled by Bloomberg had expected $2.36 billion after that the retailer reported sales between $2.34 billion and $2.37 billion.
Earnings topped estimates of $2.75 per share to $2.87. This is also higher than the EPS of $2.53 the company reported a year ago.
The company forecast fourth-quarter revenue of $3.48 billion to $3.51 billion, compared to consensus estimates of $3.5 billion. The company also forecast fourth-quarter earnings per share in the range of $5.56 to $5.64, below estimates of $5.70.
For the full year, the retailer raised its net revenue forecast to between $10.45 billion and $10.49 billion, up from the previous range of $10.38 billion to $10.48 billion. of dollars. Its earnings per share forecast was also raised to a range of $14.08 to $14.16 for the year, up from the previous forecast of $13.95 to $14.15.
“Our third quarter performance demonstrates lululemon's enduring strength globally, as we saw continued momentum in our international markets and Canada,” Lululemon CEO Calvin McDonald said in the earnings release.
“Looking forward, we are pleased with the start of our holiday season and remain focused on accelerating our U.S. business and growing our brand awareness around the world. “
Gross margins improved on a sequential basis, increasing 150 basis points to 58.5%, compared to an 80 basis point jump in the second quarter. The company also announced that it approved a $1 billion increase to its stock repurchase program on December 3.
Leading up to the report, the stock was one of the worst performers in the S&P 500 (^GSPC) this year, in free fall of more than 30% newer brands like Alo and Vuori conquered market share with more trendy styles and products.
Stocks also significantly underperformed the consumer discretionary sector (XLY), an increase of around 27% over the same period.
And although the stock has rebounded from the four-year lows it faced over the summer, analysts have pointed to increased short interest as a catalyst, making the fundamental long-term history all the more important.
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