NEW YORK (TheStreet) - Investors cheered Lululemon Athletica (LULU) shares on Thursday, following the yoga wear maker's better-than-expected third-quarter earnings, despite it tempering Wall Street expectations for the fourth quarter.
The Vancouver-based apparel retailer reported quarterly net income of $60.5 million, or 42 cents a share, down 8.5% from last year's quarter but ahead of consensus earnings expectations of 38 cents a share. Lululemon's sales, while up 10% year over year to $419 million, were softer than analysts' had expected.
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The company forecasted fourth-quarter revenue to range between $570 million and $585 million, below analysts' expectations of $597 million. Lululemon attributed the guidance to "West Coast port delays, a lower Canadian dollar, and delayed store openings." It expects EPS between 65-69 cents a share, below consensus estimates of 72 cents, according to Thomson Reuters.
Shares were trading up 9.5% to $51.1, with more than 12.9 million shares changing hands, at last check. Here's what analysts said.
Edward Yruma, KeyBanc Capital Markets (Buy)
lululemon athletica inc. reported 3Q14 EPS of $0.42, ahead of our $0.38 estimate. The 3% comp (including ecommerce) was about 200 bps stronger than we had modeled, and we think provides evidence that new product is resonating with consumers. This marks the second consecutive quarterly EPS beat, and we think signifies a more predictable financial model.
The company did not flow through the entire 3Q beat and only increased annual guidance slightly (from $1.72-$1.77 to $1.74-$1.78), citing the impact of port delays, unfavorable currency, and delayed store openings. Nevertheless, the forecast still provides for a continuation of low single-digit comps, which we view positively in light of the sub-optimal in-store inventory levels. We continue to believe that the company has largely put its period of operational difficulty behind it and earnings will begin to grow in 2015.