Lululemon Athletica (LULU - Get Report) shares surged to an all-time high Friday after the sportswear retailer posted stronger-than-expected second quarter earnings, and boosted its full-year profit forecasts, amid its move into menswear and a renewed push to grow online sales.
Lululemon said earnings for the three months ending on August 4, the company's fiscal second quarter, came in at 96 cents per share, up 35.2% from the same period last year and firmly ahead of the Street consensus forecast of 89 cents per share. Group revenues, the company said, rose 22% to $883 million, again topping analysts' forecasts of a $842.4 million tally, while same-store sales rose by a forecast-busting 17%.
Looking into the remainder of 2019, Lululemon said it sees full-year sales in the region of $3.8 billion to $3.84 billion and earnings of between $4.63 and $4.70 per share, 12 cents higher than the top end of its prior forecast.
"On the bottoms business, as you know, it's a core category for us in both women's and men's and in Q2 we saw both of those continue to perform very strong with double-digit comp performance. In fact, men's outperform women's as we continued to see success in our men's initiative as one of the key Power of Three growth initiatives," CEO Calvin McDonald told investors on a conference call late Thursday. "So, a very good healthy balanced bottoms business across both pant, shorts men's and women's and we continue to have innovative plans that we'll be launching to continue to drive that momentum forward."
Lululemon shares were marked 6.2% higher in early Friday trading to change hands at $200.19 each, an all-time high that extends the stock's year-to-date gain past 63% and value the Vancouver, British Columbia-based group at just over $26.5 billion.
"We think the combination of ongoing top-line momentum and accelerating flow-through potential should continue to support EPS upside to Consensus, and continue to warrant a valuation premium at the top of the peer group," said Credit Suisse analyst Michael Binetti, who boosted his price target on the stock by $37 to $235 following last night's results. "Longer-term (2020), we think (gross margin) headwinds from lease acctg/accelerated air freight should start to diminish, and international margins should start to inflect slowly."