Lululemon Shares Fall 8% on Mixed Q2 Earnings, Tepid Q3 Forecast

Athletic apparel maker Lululemon Athletica inc. (NASDAQ:LULU) posted mixed Q2 earnings and offered a lukewarm Q3 forecast, sending its shares plunging over 8% in after-hours trading.

The Vancouver-based company reported Q2 net income of $0.38 per share, matching analyst estimates. Revenue rose 13.6% from last year to $514.52 million, missing Wall Street’s view of $515.78 million.

Same-store sales rose by 4% in the quarter, or 5% when excluding currency exchange effects.

Looking ahead, LULU forecast Q3 earnings of $0.42 to $0.44 per share, which could miss analyst estimates of $0.44. The company’s Q3 revenue outlook of $535 to $545 million straddles Wall Street’s view of $542.52 million.

The company expects Q3 comps to rise 3%, or 4% on a constant currency basis.

From the press release:

Laurent Potdevin, Lululemon’s CEO, stated: “The second quarter demonstrated strong results as we delivered sales and EPS at the high-end of our guidance and saw an important inflection in our gross margin and earnings performance.”

Mr. Potdevin continued: “Our progress in the second quarter, especially in gross margin and inventory, marks the beginning of our recovery in profitability and sustainable long term growth.”


Investors were not impressed with the latest results, and LULU shares plunged $6.46 (-8.43%) to $70.20 in after-hours trading following the earnings release. Prior to today’s report, LULU had surged 46% year-to-date.

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