Shares of Lululemon (LULU) rose about 4% on Thursday after the company raised its full-year profit outlook and increased its share repurchase program by $1 billion.
The company said late Wednesday that it now sees full-year earnings per share in the range of $14.00 to $14.27 to $14.47, up from its previous guidance of $14.00 to $14.20. It maintained its previous forecast of full-year revenue of $10.7 billion to $10.8 billion.
The report comes amid growing investor concern about the company’s slowing sales growth amid growing competition in the athleisure space from emerging brands such as Alo and Vuori.Prior to the earnings release, Lululemon’s shares had fallen about 40% in early 2024, making it one of the worst-performing stocks in the S&P 500 (^GSPC) index this year.
“What we’re seeing in the market is a bit of a relief rally,” Aneesha Sherman, a senior analyst at Bernstein, told Yahoo Finance after Lululemon’s announcement.
Same-store sales in North America were flat in the first quarter, which was broadly expected but remains a concern for investors, Sherman said.
“The question is whether we can offset that with our international operations, and we did this quarter,” Sherman said.
Lululemon CEO Calvin McDonald said the company “missed an opportunity” with its women’s clothing line in the U.S. A narrow color palette, particularly for leggings, contributed to slower sales growth, McDonald said. Conversely, he noted that male consumers were responding well to new products in categories like golf and workout.
“Nothing has changed in terms of the growth potential of the brand, not just internationally, but in all our markets and even in the U.S.,” McDonald said.
He added: “All of these are within our control. The team has been pursuing all of these and we expect many of them to be resolved later this year.”
