Lululemon shares are up 10% after the bell: here’s why

Lululemon Athletica Inc (NASDAQ: LULU) is up 10% in extended trading after the athletic apparel retailer reported better-than-expected results for its fiscal second quarter and raised future guidance.

Key takeaways from Lululemon Q2 report

• Earned $289.5 million versus the year-ago $208.1 million
• Per-share earnings climbed significantly from $1.59 to $2.26
• Adjusted EPS printed at $2.20 as per the quarterly report
• Revenue jumped 29% on a year-over-year basis to $1.87 billion
• FactSet consensus was $1.86 of EPS on $1.77 billion in revenue
• DTC went up 30% and accounted for 42% of total revenue

Lululemon Athletica noted a 16% annualised growth in its same-store sales in the recently ended quarter. In the earnings press release, CFO Meghan Frank said:

Despite challenges in the macro environment, guest traffic in our stores and on our eCommerce site remains robust, which speaks to the strength of our multi-dimensional operating model.

Even with the price action in response to the retail news, Lululemon shares are still down 20% from their year-to-date high.

Lululemon shares up on strong guidance

The U.S. – Canadian company opened 21 net new stores to end the quarter with 600 stores in total. Inventories were up 85% year-on-year.

For the full financial year, Lululemon now expects $9.75 to $9.90 of adjusted EPS on up to $7.94 billion in revenue. In comparison, experts had forecast $9.44 and $7.70 billion, respectively. CEO Calvin McDonald said:

As we look ahead, we’re excited about our ability to successfully deliver against our Power of Three ×2 growth plan and create ongoing value for all our stakeholders.

Wall Street currently has a consensus “overweight” rating on Lululemon shares with upside to $371 on average.