Lululemon shares jump after profit, revenue forecasts raised

Tue Jun 9, 2015 11:12am EDT
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By Solarina Ho

(Reuters) - Lululemon Athletica Inc LULU.O shares jumped on Tuesday after the Canadian yogawear retailer raised its full-year outlook, further evidence it is regaining its footing following a high-profile 2013 recall of overly sheer yoga pants.

The company also reported a better-than-expected first-quarter profit despite poor weather, West Coast port delays, and the impact of weaker Canadian and Australian dollars.

Shares surged as much as 8.4 percent to $66.67 in morning trading, their best performance in about a month and a half.

Lululemon is in the midst of a turnaround to improve quality, expand its product line and solve supply-chain problems while laying the groundwork for faster international growth.

"Just a year ago, people were concerned that this brand was done," said Paul Alexander, an analyst at BB&T Capital Markets. "The rejuvenation in comps here suggests that they've moved past the self-inflicted problems of 2013, 2014."

The retailer, which had 316 stores at the end of the first quarter, just opened its second Singapore shop and is set to open its first in Hong Kong. By the third quarter it plans to open a second Hong Kong outlet and its first in Dubai.

Executives told analysts in a conference call that Europe and Asia were performing well above expectations.

The company raised its full-year earnings forecast to $1.86 to $1.91 per share from $1.85 to $1.90 and revenue forecast to $2.0 billion to $2.05 billion from $1.97 billion to $2.02 billion.   Continued...

A woman walks into a store of yogawear retailer Lululemon Athletica in downtown Vancouver June 11, 2014. REUTERS/Ben Nelms