Lululemon Shares Shoot Up On 'Better Than Feared' Revenue
Lululemon Athletica flagship store in Vancouver, Canada. (Andrew Chin/Getty Images)Better than expected second quarter earnings are proving to be a welcome pick-me-up for Lululemon Athletica . Shares of the yoga apparel brand shot up close to 14% Thursday morning opening near $43.75. Prior to the bump the stock was down 35% year-to-date.
The company reported $390.7 million in second quarter revenue, up 13% from the same period last year and well ahead of Wall Street analysts' consensus call. Net income came in at $48.7 million which was down from a year earlier but still beat the Street's $43.6 million estimate. Earnings per share were 33 cents compared to a 30 cent estimate.
While same store sales decreased 5%, direct to consumer sales - web - jumped a staggering 30% to $63.5 million. As a result total comparable sales were flat.
In a statement on the results CEO Laurent Potdevin said, 'While there is still much to be done, we are making meaningful progress on building a scalable foundation for our next phase of global growth.' As Potdevin alluded it has been a rough year for Lululemon.
Last fall the chain was forced to recall 17% of its yoga pants because they were see-through. Billionaire founder Chip Wilson then got into hot water when he blamed the sheerness on the shape of women's bodies. In the months since Wilson has stepped down from his role as chairman of the board, the company lost popular CEO Christine Day and - most recently - Wilson sold half his stake to a private equity firm.
When the company reported weak first quarter earnings and lowered its outlook in June the stock shed nearly 16% in a single day. On Thursday, Lulu again revised its earnings estimate. The revision was up this time, but only slightly and not to pre-first quarter levels.
For 2014 the company now expects revenue to come in between $1.78 billion and $1.8 billion. Prior to the last cut the top estimate was for $1.82 billion. It now expects diluted earnings per share in the range of $1.50 to $1.56, adding just a penny to the top estimate and well below the $1.80 to $1.90 per share Lululemon once expected. Normalized for the one-time tax adjustment related to the planned repatriation the company said earnings per share could be $1.72 to $1.77.
In a note on the results Citi Analyst Oliver Chen pointed out that the stock is 'likely going higher on LULU's better than feared top-line' calling attention to the low expectations.
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