Lululemon Athletica Inc. experienced a significant surge in its stock price, climbing nearly 10% in premarket trading following the company’s impressive earnings report and an optimistic outlook for the upcoming fiscal year. The Canada-based retailer announced that its diluted profits for the third quarter reached $2.59 per share, surpassing analysts’ expectations of $2.22 per share. The company’s revenue also showed a commendable increase, rising 7% year-over-year to $2.6 billion, which was above the anticipated $2.47 billion.
Lululemon’s revenue growth was primarily driven by strong international sales, which saw an 18% increase on a comparable basis. However, the company’s same-store sales in the Americas faced a decline of 5%. CEO Calvin McDonald expressed optimism as the company heads into the holiday season, indicating encouragement from early performance metrics. He emphasized that Lululemon is making substantial progress on its turnaround plan, with projections suggesting even more positive developments by 2026.
In a noteworthy announcement, McDonald revealed his intention to step down from his role as CEO and from the company’s board on January 31. He will remain onboard as a senior adviser until March 31. During this transition, CFO Meghan Frank and Chief Commercial Officer André Maestrini will take on the roles of interim co-CEOs.
Looking ahead, Lululemon provided guidance for the fourth quarter, projecting net revenue between $3.5 billion and $3.58 billion, aligning closely with the Wall Street consensus estimate of $3.56 billion. For the full fiscal year, the company forecasts net revenue between $10.96 billion and $11 billion, reflecting a 4% growth. Analysts expect full-year revenue to hit the lower end of this range at $10.96 billion. Furthermore, Lululemon’s anticipated full-year diluted earnings per share are expected to range from $12.92 to $13.02, slightly exceeding the Street’s estimate of $12.86 per share.
