Lululemon Athletica Inc (NASDAQ:LULU) shares surged premarket after the athletic apparel brand’s third quarter earnings impressed.
Revenue increased by 9% year-over-year to $2.4 billion, above Wall Street estimates of $2.36 billion.
Earnings per share were $2.87, up from $2.53 in the year-ago quarter and topping expectations of $2.72.
For the fourth quarter, lululemon guided revenue in the range of $3.48 billion to $3.51 billion, compared to the consensus of $3.5 billion.
It expects Q4 EPS between $5.56 and $5.64, short of estimates of $5.70.
The company also boosted its full-year sales and profit forecasts. It now expects revenue in the range of $10.45 billion to $10.49 billion, up from its earlier forecast of $10.38 billion to $10.48 billion and EPS between $14.08 to $14.16, up from the prior $13.95 to $14.15.
Citi analysts wrote in a note to clients that the company’s strong Q3 drives more confidence in the US returning to growth in 2025.
They see the fourth quarter guidance as conservative, noting management’s commentary that they were pleased with the Black Friday weekend.
“Guidance assumes an approximately 300 basis point comparable headwind from a shortened holiday calendar (but we did not see evidence of that in 4Q 2019) and gross margin pressure from fixed cost deleverage (despite 53rd week benefit),” they wrote.
“As we look to fiscal 2025, we are more confident than before that the US will return to growth. However, uncertainty remains. We see a balanced risk/reward.”
Shares of lululemon added 8.8% at about $345 shortly before US markets opened on Friday.