Lululemon’s stock surges after the company raises its profit outlook and announces plans for stock buybacks.: Lululemon profit surge – Stock buybacks boost profit

1. Lululemon stock performance
2. Lululemon profit outlook
3. Lululemon stock buybacks

Lululemon’s stock surged over 10% in after-hours trading after the company raised its full-year profit outlook and expanded its stock repurchase program by $1 billion. The company now expects earnings per share between $14.27 and $14.47, up from the previous range of $14 to $14.20, while maintaining revenue forecasts of $10.7 billion to $10.8 billion. Despite concerns about slowing sales growth and competition from newer brands like Alo and Vuori, analysts are cautiously optimistic about Lululemon’s future performance. The departure of the chief product officer led to a brief stock decline, but the company’s strong first-quarter results exceeded Wall Street’s expectations.

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Lululemon’s stock surged over 10% in after-hours trading after the company announced an increase in its full-year profit outlook and a $1 billion expansion of its stock repurchase program. This news comes as a welcome relief to investors who have been concerned about the company’s slowing sales growth and increased competition in the athleisure market.

The company now expects full-year earnings per share to be between $14.27 and $14.47, up from its previous estimate of $14 to $14.20. Despite this positive revision, Lululemon has maintained its revenue forecast for the year in the range of $10.7 billion to $10.8 billion.

Investor worries about the company’s performance were compounded by the rise of new athleisure brands like Alo and Vuori, which have been eating into Lululemon’s market share. Prior to the earnings report, Lululemon’s stock had dropped about 40% since the beginning of the year, making it one of the worst-performing stocks in the S&P 500.

Analysts believe that Lululemon’s recent success can be attributed to a surge in demand for casual wear during the pandemic. However, sales growth has slowed in recent quarters, with revenue increasing by only 10% in the most recent quarter compared to the previous year.

The departure of the company’s chief product officer, Sun Choe, in May caused a 7% drop in Lululemon’s stock price. This move led some analysts to question the company’s product strategy and its ability to compete with newer brands in the market.

Despite these challenges, Lululemon’s first-quarter revenue of $2.21 billion exceeded Wall Street’s estimates, while its earnings per share of $2.54 also surpassed expectations. However, comparable sales in North America remained flat, raising concerns among investors about the company’s future growth prospects.

Analysts like Randal Konik from Jefferies remain skeptical about Lululemon’s ability to sustain its growth, especially as competition intensifies in the US market. Konik believes that the company is losing market share to brands like Alo and Vuori, which could impact its future earnings and margins.

In conclusion, Lululemon’s recent stock surge reflects investor optimism about the company’s improved profit outlook and stock repurchase program. However, challenges remain as the company faces stiff competition in the athleisure market and struggles to maintain its sales growth. Investors will be closely watching Lululemon’s performance in the coming quarters to see if it can continue its upward trajectory.

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