Thursday, December 8, 2016
Lululemon is soaring after beating on earnings and raising its guidance
Lululemon shares jumped by as much as 16% in pre-market trading on Thursday after the company reported third-quarter earnings that were stronger than analysts had expected.
After the market close on Wednesday, the maker of yoga clothing said it earned $0.47 per share in an adjusted basis, topping the forecast for $0.43. Its net revenues rose 13% to $544.4 million.
The company told investors on the earnings call that markdowns had little effect on product margins.
Lululemon is poised to continue benefitting from strong demand for its leggings, according to Piper Jaffray. The bank's semiannual report on teen spending showed that leggings/Lululemon retained its place as the top fashion trend among teens.
Lululemon raised its full-year guidance, and its outlook for the fourth quarter was as strong as analysts had forecast. The company saw fourth-quarter earnings in a range of $0.96 to $1.01, in line with the forecast for $1. Net revenue was estimated in a range of $765 million to $785 million, just below the forecast for $787 million.
The company said its board had authorized a $100 million share buyback program.
Lululemon shares gained 14% this year through the market close on Wednesday. Analysts at Bank of America Merrill Lynch and Mizuho upgraded their rating on the stock post-earnings.