Lululemon Athletica Inc. (NASDAQ: LULU) reported first-quarter 2016 results after markets closed Thursday afternoon. The yoga gear maker reported adjusted diluted earnings per share (EPS) of $0.38 on revenues of $514.5 million, compared with EPS of $0.34 on revenues of $453 million in the same period a year ago. The consensus estimates called for EPS of $0.38 on revenues of $515.47 million.

On a GAAP basis, EPS came in at $0.39, compared with $0.34 in the year-ago quarter. Adjusted EPS excluded a tax benefits of $1.9 million and interest expense of $300,000.

Total comparable sales for the quarter, including direct sales to consumers, increased by 5% year-over-year on a constant dollar basis. Same-store sales rose 4% and direct-to-consumer sales rose 7%, also on a constant dollar basis.

Gross profit as a percentage of net revenue rose from 46.8% in the year-ago quarter to 49.4% although the dollar value rose by nearly 20%.

Income from operations increased by 14.4% year over year and as a percentage of revenue slipped from 14.7% in the second quarter of last year to 14.4%. Cost of goods sold rose by more than $20 million and SG&A expenses as a percentage of revenue rose from 32.1% a year ago to 35%.

The company guided second-quarter diluted EPS in the range of $0.42 to $0.44 on revenues of $535 to $545 million. Consensus estimates called for EPS of $0.44 on revenues of $541.78 million.

Lululemon raised its outlook for fiscal year revenue from a prior range of $2.305 to $2.345 billion to a new range of $2.325 billion to $2.350 billion. The company also raised EPS guidance from a prior range of $2.07to $2.15 to a new range of $2.11 to $2.19. Analysts have estimated EPS of $2.15 and revenues of $2.34 billion.

During the second quarter, the company repurchased 200,000 shares of common stock at an average cost of $63.65 per share, and has now completed its share buyback plan.

The company’s CEO, Laurent Potdevin, said:

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.

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.

The company’s second-quarter EPS guidance is below expectations and that will weigh on the shares in Wednesday’s trading. The full-year guidance has been increased and that will ameliorate the second-quarter forecast somewhat.

Revenues were a little soft and the outlook was no better than inline with prior expectations. That’s hardly a reason for investors to cheer Lululemon’s performance, but the reaction seems a bit harsher than necessary. It may have something to do with some rather good reports in recent days from other retailers.

Lululemon’s shares traded down about 8% in Thursday’s after-hours session at $70.27 in a 52-week range of $43.14 to $81.81. The consensus price target before this report was $73.21, and the high target was $92.00.

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