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.”

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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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