Lululemon reported net income fell 14% to $48.7 million, or 33 cents a share, for the fiscal second quarter, compared income of $56.5 million, or 39 cents a share, a year earlier. Revenue rose 13% to $390.7 million. Both top and bottom line results beat consensus estimates. The Vancouver-based yoga apparel company said comparable sales were flat for the Aug. 3-ending quarter. Same-store sales declined 5% in the quarter while e-commerce sales jumped 30%.
Shares surged 14% to $43.88 following the results, but the "relief rally" was likely driven by a "short squeeze," says Citigroup analyst Oliver Chen. More than 25 million shares changed hands on Thursday, more than seven times the stock's average daily trading volume.
Lululemon said it expects third-quarter net revenue in the range of $420 million to $425 million, assuming comparable sales growth in the "low single digits." Per share earnings are forecast to be between 36 cents and 38 cents a share, excluding the potential for share repurchases.
Here's what analysts said on Thursday.
Adrienne Tennant, Janney Capital Markets (Neutral; $44 fair value estimate)
The company was able to beat expectations due to strong performance in fall transitional product that the company pulled forward from 3Q14 to drive sales in July. We commend management for delivering improving top-line results as well as a much cleaner inventory position. ... Given the much cleaner inventory position moving into the back half, we believe there will be an easing of margin pressure; however, we still have concerns regarding the company's merchandise mix strategy of increasing the penetration of seasonal product and look to see ongoing success with this strategy on a consistent basis.