Lululemon shares soar on unexpected earnings surprise

In the United States, Lululemon Athletica released its third-quarter earnings report for 2024 on Thursday, December 5. The report revealed that Lululemon's stock rose approximately 8% after the market closed, reflecting positive market reaction to the earnings. The company reported earnings per share of $2.87, surpassing analyst predictions of $2.71, showcasing strong performance for the quarter. Sales totaled $2.40 billion, which also surpassed the forecast of $2.36 billion, marking a 9% year-over-year growth. The report pointed to a mixed performance between domestic and international markets, with American net revenue increasing by 2% while international net revenue surged by 33%. Moreover, overall comparable sales saw a growth of 4%, but comparable sales in the Americas fell by 2%, contrasting with a 25% rise in International comparable sales. In addition, Lululemon revealed operational income of $490.7 million for the quarter, indicating robust financial health and operational efficiency. Throughout the third quarter, Lululemon made strategic decisions to enhance shareholder value, repurchasing 1.6 million shares of its common stock at a total cost of $408.5 million. In line with this strategy, the company authorized a $1.0 billion increase to its share repurchase program, bringing the total authorized repurchases to approximately $1.8 billion. This move signals confidence in the company's future performance and commitment to returning value to shareholders, even amid mixed sales results domestically. Following the earnings announcement, several analysts reacted positively, adjusting their price targets for Lululemon's shares. Dana Telsey from Telsey Advisory Group maintained an Outperform rating while raising the price target from $360 to $430. Analysts from Keybanc, Baird, Piper Sandler, and Wells Fargo also updated their price targets, reflecting an optimistic sentiment towards Lululemon's growth potential based on their recent performance. Such analyst activity indicates a favorable outlook in the investment community, likely contributing to the stock's increase in value. Looking ahead, Lululemon provided guidance for the fourth quarter of 2024, projecting revenues between $3.475 billion and $3.510 billion, slightly above the $3.496 billion anticipated by analysts. This forecast signals continued optimistic performance expectations for the company. Lululemon also expects its net revenue for the fiscal year to range from $10.45 billion to $10.48 billion. With its strategic share repurchases, versatile international growth, and positive analyst sentiment, Lululemon Athletica appears well-positioned for future success despite challenges in the domestic market.