Lululemon’s Stock Rises 7% On Earnings Beat

The stock of Lululemon (LULU) is up 7% after the fitness apparel maker reported first-quarter financial results that were better than Wall Street’s forecasts.

The Vancouver-based company announced earnings per share (EPS) of $2.54 U.S. versus $2.38 U.S. that was expected among analysts.

Revenue of $2.21 billion U.S. topped consensus expectations of $2.19 billion U.S. Sales were up 10% from a year earlier.

The company also announced that it’s adding $1 billion U.S. to its stock buyback program.

However, despite the beat, Lululemon reported that its sales in North America continue to slow and offered weak forward guidance for the current second quarter of 2024.

The company forecast Q2 revenue of $2.40 billion U.S. to $2.42 billion U.S., which is below consensus estimates of $2.45 billion U.S.

Earnings for Q2 are expected at $2.92 U.S. to $2.97 U.S., which is also below estimates of $3.02 U.S.

Management said that they expect conditions to improve in the second half of this year. For all of 2024, Lululemon forecasts earnings of $14.27 U.S. to $14.47 U.S. per share, ahead of the $14.11 U.S. that analysts expected.

Full-year revenue is expected at between $10.70 billion U.S. and $10.80 billion U.S., which is in line with Wall Street expectations.

Lululemon is still growing in North America but at a much slower rate. During Q1, sales in the Americas increased 3% versus a 17% rise a year earlier.

Across the entire business, Lululemon’s comparable sales rose 6%, which was below the 7% that analysts had expected. The company is now focused on its international expansion.

In May, Lululemon announced that its longtime Chief Product Officer Sun Choe is leaving the company, which caused the stock to drop.

So far in 2024, Lululemon’s stock has declined 40% to trade at $308.27 U.S. per share. The stock has been one of the worst performers in the benchmark S&P 500 index year to date.

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