Lululemon Athletica (NASDAQ:LULU) exceeded expectations with its second-quarter earnings, leading to a more than 4% gain in its stock price pre-market today, despite the disappointing revenue projections for the upcoming quarter and full fiscal year.
The athletic apparel giant reported adjusted earnings of $3.15 per share for the quarter, beating analysts’ predictions of $2.94. Revenue increased by 7% year-over-year to $2.4 billion, though it slightly missed the anticipated $2.41 billion mark.
Comparable sales rose by 2%, or 3% when adjusted for currency fluctuations. Notably, international sales saw a significant 29% surge, while growth in the Americas slowed to just 1%.
However, Lululemon’s outlook for future revenue left investors concerned. The company forecasted third-quarter revenue to be between $2.34 billion and $2.365 billion, falling short of Street expectations of $2.41 billion. The full-year revenue guidance was also lower than anticipated, with a range of $10.375 billion to $10.475 billion, compared to the Street estimate of $10.62 billion.
On a positive note, Lululemon’s gross margin improved by 80 basis points to 59.6%, and its operating margin increased by 110 basis points to 22.8%. The company expanded its retail footprint by opening 10 new stores during the quarter, bringing the total to 721 locations.