Why Lululemon Is Rallying

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When Lululemon Athletica Inc. (NASDAQ: LULU) reported its fiscal first-quarter financial results after the markets closed on Thursday, the company said that it had $0.32 in earnings per share (EPS) and $520.3 million in revenue. That compared with consensus estimates of $0.28 in EPS and revenue of $512.7 million. The same period of last year reportedly had EPS of $0.30 and $495.52 million in revenue.

Total comparable sales decreased 1%, as well as by 1% on a constant dollar basis. Direct to consumer net revenue was flat, also on a constant dollar basis.

In terms of guidance for the fiscal second quarter, the company expects EPS in the range of $0.33 to $0.35 and revenues between $565 million and$570 million, based on a total comparable sales increase in the low-to-mid single digits on a constant dollar basis. The consensus estimates for the quarter call for $0.41 in EPS and $560.15 million in revenue.

On the books, Lululemon’s cash and cash equivalents totaled $698.3 million, up from to $550.0 million at the end of the first quarter of fiscal 2016.

Laurent Potdevin, CEO of Lululemon, commented:

I’m excited to see the positive trends that materialized late in Q1 continuing into Q2. Our current outlook for the remainder of 2017 is strong, and I’m energized by the growth strategies taking shape. I’m also confident in our plans to restructure ivivva and believe they are the best means to optimize this part of the business.

Potdevin continued:

From our cadence of product innovation, to our enhanced digital experience, and first-ever global brand campaign, we have never felt more deeply connected to our guest or better positioned to expand our collective. We remain laser focused on owning our position as the global brand defining an active, mindful lifestyle.

Shares of Lululemon closed Thursday up 0.8% at $48.67, with a consensus analyst price target of $61.47 and a 52-week range of $47.26 to $81.81. Following the release of the earnings report, the stock is up 16% at $56.55 in early trading indications Friday.