Lululemon Volatile Despite Strong Earnings Beat

Lululemon topped analysts' second quarter revenue and earnings expectations easily.
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Shares of retailer lululemon athletica  (LULU) - Get Report were volatile Tuesday in after-hours trading after the company reported second-quarter results that easily topped analyst expectations for the period. 

The British Columbia-based company reported second-quarter revenue of $902.9 million, a 2% increase despite the fact that 14 of its stores were still closed due to coronavirus. Earnings per share for the quarter came in at 74 cents. 

Analysts were expecting the company to report revenue of $842.49 million with earnings of 55 cents per share. 

"As trends around the world are shifting to working and sweating from home with an increased focus on health and wellness, we believe 2020 is likely an inflection point for retail and for lululemon," CEO Calvin McDonald said in a statement. "We are cautiously optimistic with regard to the second half of the year as we continue to navigate the uncertain environment."

The company's direct-to-consumer segment saw a 155% increase to $554.3 million in revenue. Over half of the company's revenue in the quarter came through its online presence. 

Lululemon shares fell $5.85, or 1.7%, to $343.95 in after-hours trading. In the regular session, shares fell 3.2%

The company declined to give full year guidance due to uncertainty surrounding the coronavirus pandemic. 

Last week, analysts at Citigroup downgraded the retailer to neutral from buy on valuation concerns. “We have to ask ourselves if we can realistically recommend buying LULU at $400 with a call it can go to at least $460 over the next 12 months,” Citi analyst Paul Lejuez wrote in a commentary, according to Bloomberg. “We just can’t do it.”

The stock has risen more than 50% year to date.