The turnaround of Lululemon Athletica Inc. (NASDAQ: LULU) is well underway, based on its most recent quarterly figures. Revenue rose 13% to $391 million. However, net income was soft, as it fell from $57 million a year ago to $49 million.

The company disclosed for the fiscal quarter that ended August 3:

• Net revenue for the quarter increased 13% to $390.7 million from $344.5 million in the second quarter of fiscal 2013.
• Total comparable sales, which includes comparable store sales and direct to consumer, remained flat for the second quarter on a constant dollar basis. Comparable store sales for the second quarter decreased by 5% on a constant dollar basis and direct to consumer revenue increased 30% on a constant dollar basis.
• Direct to consumer revenue increased to $63.5 million, or 16.2% of total Company revenues, in the second quarter of fiscal 2014, an increase from 14.3% of total Company revenues in the second quarter of fiscal 2013.
• Gross profit for the quarter increased 6% to $197.3 million, and as a percentage of net revenue gross profit decreased to 50.5% for the quarter from 54.0% in the second quarter of fiscal 2013.
• Income from operations for the quarter decreased 14% to $67.9 million, and as a percentage of net revenue was 17.4% compared to 22.9% of net revenue in the second quarter of fiscal 2013.
• The effective tax rate for the second quarter of fiscal 2014 was 30.1% compared to 29.7% a year ago.
• Diluted earnings per share for the quarter were $0.33 on net income of $48.7 million, compared to diluted earnings per share of $0.39 on net income of $56.5 million in the second quarter of fiscal 2013.

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Management posted a fairly optimistic outlook:

For the third quarter of fiscal 2014, we expect net revenue to be in the range of $420 million to $425 million based on a total comparable sales increase in the low single digits on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.36 to $0.38 for the quarter. This guidance assumes 144.7 million diluted weighted-average shares outstanding and a 30.2% tax rate. The guidance does not reflect potential future repurchases of the Company’s shares.

For the full fiscal 2014, we now expect net revenue to be in the range of $1.780 billion to $1.800 billion based on a total comparable sales increase in the low single digits on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $1.51 to $1.56 for the full year, or $1.72 to $1.77 normalized for the non-recurring tax adjustment incurred in the first quarter of fiscal 2014 related to the repatriation of foreign earnings that will be used to fund the share buyback program. This guidance assumes 145.2 million diluted weighted-average shares outstanding and a 38.5% tax rate, which includes the above tax adjustment, or 30.2% before the tax adjustment. The guidance does not reflect potential future repurchases of the Company’s shares.

Wall Street’s perception of the company certainly must be better than a year ago. However, the stock still trades near the bottom of its range at $38, compared to a 52-week low of just above $36 and a 52-week high just above $77.

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