Lululemon (LULU) investors breathed a sigh of relief on Thursday as the company’s stock surged about 4% following a positive earnings report. The athleisure giant raised its full-year profit outlook and announced a $1 billion increase in its stock repurchase program.
The company now expects full-year earnings per share to fall between $14.27 and $14.47, up from the previous range of $14 to $14.20. Despite concerns over slowing sales growth and increased competition from newer brands like Alo and Vuori, Lululemon maintained its revenue forecast of $10.7 billion to $10.8 billion for the year.
Aneesha Sherman, a senior analyst at Bernstein, described the market’s reaction as a “relief rally” following the earnings release. While comparable sales in North America remained flat in the first quarter, Sherman highlighted the company’s success in international markets as a potential offset.
Lululemon CEO Calvin McDonald acknowledged some missteps in the women’s clothing lines, particularly in the US market where a limited color palette in leggings impacted sales. However, McDonald expressed confidence in the brand’s growth potential, especially in international markets and among male consumers.
McDonald reassured investors that the company is addressing these challenges and expects improvements in the second half of the year. With a strong outlook and strategic initiatives in place, Lululemon remains optimistic about its future growth prospects.