Why Lululemon Stock Is Jumping After Hours

Lululemon Athletica Inc. (NASDAQ: LULU) reported fiscal second-quarter 2017 results after markets closed Thursday afternoon. The yoga gear maker reported adjusted diluted earnings per share (EPS) of $0.39 on revenues of $581.1 million, compared with EPS of $0.38 on revenues of $514.5 million in the same period a year ago. The consensus estimates called for EPS of $0.35 on revenues of $567.6 million.

On a GAAP basis, EPS came in at $0.36, compared with $0.39 in the year-ago quarter. Adjusted EPS for the second quarter of this year excludes the impact of the ivivva restructuring and the related tax effects, and also excludes certain discrete tax items which were recognized during the second quarter of fiscal 2016..

Total comparable sales for the quarter, including direct sales to consumers, increased by 7% year-over-year on a constant dollar basis. Same-store sales rose 2% and direct-to-consumer sales rose 29%, and 30% on a constant dollar basis.

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Gross profit as a percentage of net revenue rose from 49.4% in the year-ago quarter to 51.2% although the dollar value rose by 17%. Income from operations decreased by 7% year over year.

The company guided third-quarter adjusted diluted EPS in the range of $0.50 to $0.52 on revenues of $605 to $615 million. Consensus estimates called for EPS of $0.52 on revenues of $608.29 million.

Lululemon also forecast full-year revenues of $2.545 billion to $2.595 billion and adjusted diluted EPS of $2.35 to $2.42. Analysts have estimated EPS of $2.35 and revenues of $2.56 billion.

During the second quarter, the company repurchased 1.5 shares of common stock at an average cost of $52.93 per share.

The company’s CEO, Laurent Potdevin, said:

Our performance reflects the growing global consumer response to lululemon’s unique position as the leading brand that defines an active, mindful lifestyle. Through continuing to deliver category-defining product innovation, we are creating experiences that our guests, both existing and new, desire. This strong brand momentum reinforces my confidence in our long-term strategy.

The stock has bounced as much as up 7%, primarily on the year-over-year revenue increase. The forecast is pretty much in line with expectations, so it’s hard to see the enthusiasm continuing into tomorrow’s regular trading session.

Lululemon’s shares traded up about 3.7% in Thursday’s after-hours session at $61.22 in a 52-week range of $47.26 to $77.58. The consensus price target before this report was $62.10, and the high target was $85.00.

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