Lululemon Athletica Inc. Rises on Higher Revenue, Positive Outlook

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The stock price of Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) increased significantly after the yoga pants maker reported better-than-expected quarterly earnings and issued a positive full-year outlook.

The shares of the company were trading at $44.22 per share, up by more than 15% at the time of this writing around 1:37 in the afternoon in New York.

Financial results

Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) reported second-quarter net income of $48.7 million or $0.33 earnings per diluted share compared with its $56.5 million net income or $0.39 earnings per diluted share in the same period a year ago.

The company said its revenue increased 13% from $355.5 million to $390.7 million for the second-quarter. Its direct to consumer revenue rose 16.2% or $63.5 million of its total revenue.

According to Lululemon Athletica inc. (NASDAQ:LULU), its gross profit increase 6% to $197.3 million while its income from operations declined 14% to $67.9 million. Its effective tax rate was 30.1% during the period.

Lululemon Athletica inc (NASDAQ:LULU) ended the quarter with $725.1 million in cash and cash equivalents, up from $610.3 million in the same period a year ago.

Lululemon’s strategic roadmap is on track

In a statement, Laurent Potdevic, CEO of Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) said they are on track with the implementation of the company’s strategic roadmap, and they are starting to see the results across product, brand and international expansion.

“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, and I’m excited about the collaboration between our Whitespace team and ambassadors to accelerate innovation into the future,” added Potdevin.

Oppenheimer & Co. analyst Anna Andreeva commented, “The big trend is the streetwear, and that’s what this company is executing toward. This product is still very small as a percentage of the total, but it seems there was some pent-up demand.”

On the other hand, Thomas A Filandro, an analyst at Susquehanna commented that Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) is a tough one to call from a trading perspective into 2Q earnings. According to him, “The general retail environment remained inconsistent over the summer, competition for yoga-inspired athletic apparel appears to have heated up, and LULU’s new product initiatives have only marginally impacted the assortment mix over the past several weeks.” He has a Neutral trading bias into the second-quarter earnings of the company.

Business outlook

Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) estimated that it would be able to deliver revenue in the range of $420 million to $425 million in the third-quarter. The company expects to achieve third-quarter earnings in the range of $0.36 to $0.38 per diluted share. Wall Street analysts had a consensus estimate of $0.29 in earnings per share and $376.8 million in revenue for the third-quarter.

For the full year 2014, Lululemon Athletica inc. (NASDAQ:LULU) (TSE:LLL) expected to achieve revenue in the range of $1.78 billion to $1.8 billion and earnings in the range of $1.72 to $1.77 per share. Its full-year outlook is in line with the consensus estimate.

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