Lululemon Shares Fall Despite Company Beating Earnings Estimates

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Shares of luxury athletic apparel company Lululemon were headed lower on Wednesday after the company reported third quarter financial results.

Though earnings had beaten estimates, it was a weak outlook that had Wall Street concerned.

For the quarter ended November 3rd, earnings per share at 96 cents adjusted was ahead of the 93 cents that was expected. Revenue at $916 million was also better than the $899.7 million that was expected. Same-store sales grew 17% compared to the 14.4% that was expected.

Lululemon also said that it reported double-digit growth in both its women’s and men’s businesses during the quarter, with men’s total revenue growing 38%.

Shares were falling as much as 6% in extended trading on Wednesday as the company’s fourth quarter outlook was below what Wall Street was expecting.

Lululemon expects to earn between $2.10 and $2.13 per share during the fourth quarter, which is also known as the holiday quarter. Analysts were expecting earnings of $2.13 a share.

CEO Calvin McDonald had said that Lululemon saw “record performance” during the Thanksgiving weekend.

He said during the earnings call, “We are pleased with the strength in the business with continued growth across product categories, channels and regions. Our results for the third quarter include, total revenue growth of 23%, a constant dollar comp increase of 17% on top of an 18% increase last year and an earnings per share increase of 28% compared to adjusted earnings per share last year. I also want to mention how our momentum has extended into quarter four with record setting days over the Thanksgiving weekend and into Cyber Monday, as guests responded well to our range of product offerings. I was thrilled to be able to visit six of our stores in four cities over the holiday weekend, and I was very impressed to see how our strategies came to life.”

He added, “These results keep us firmly on track to deliver on our Power of Three growth plan as we discussed at our Analyst Day earlier this year. As you’ll recall, our five-year vision details our path to grow our core business in the low double digits annually, while also doubling our men’s, doubling our digital and quadrupling our international businesses by the end of 2023. Our organization is aligned behind these priorities and we are focused on the key strategic pillars that will enable us to live into and deliver against these goals.”

The company alo announced recently that its Chief Operating Officer Stuart Haselden would be leaving, effective Jan. 10. He will become the CEO at privately held luggage company Away.

Lululemon shares are up over 90% this year so far.

Disclaimer: We have no position in Lululemon Athletica Inc. (NASDAQ: LULU) and have not been compensated for this article.