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Why Lululemon (LULU) Is Gaining

NEW YORK (TheStreet) -- Lululemon (LULU - Get Report) is spiking after fourth-quarter results beat analysts' estimates and as investors grow more confident of resurgence in the brand's popularity.

By midday, shares had climbed 6.1% to $51.18.

The retailer, best known for its athletic yoga apparel, has been struggling with it image since last year's recall of its black yoga pants due to transparency issues (and founder Chip Wilson's criticism that some female bodies weren't ideal for its yoga pants) caused once-loyal customers to shun the products.

For its fourth quarter ended Feb. 2, the specialty apparel retailer reported net revenue 7% higher to $521 million, while comparable store sales over the quarter decreased 2%.

Net income of $109.7 million, or 75 cents a share, was largely on par with profits of $109.4 million, or 75 cents a share, a year earlier.

Analysts surveyed by Thomson Reuters forecast net income of 72 cents a share and sales of $515.11 million.

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"As we move into 2014, we are reflecting on our learnings with humility, and are entirely focused on our future," said Laurent Potdevin, CEO since the beginning of the year, in a statement. "2014 is an investment year with an emphasis on strengthening our foundation, reigniting our product engine, and accelerating sustainable and controlled global expansion."

TheStreet Ratings team rates LULULEMON ATHLETICA INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LULULEMON ATHLETICA INC (LULU) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."

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