Advertisement
Canada markets open in 3 hours 11 minutes

  • S&P/TSX

    21,885.38
    +11.66 (+0.05%)
     

  • S&P 500

    5,048.42
    -23.21 (-0.46%)
     

  • DOW

    38,085.80
    -375.12 (-0.98%)
     

  • CAD/USD

    0.7327
    +0.0003 (+0.05%)
     

  • CRUDE OIL

    83.92
    +0.35 (+0.42%)
     

  • Bitcoin CAD

    87,960.26
    +855.62 (+0.98%)
     

  • CMC Crypto 200

    1,391.67
    -4.86 (-0.35%)
     

  • GOLD FUTURES

    2,361.00
    +18.50 (+0.79%)
     

  • RUSSELL 2000

    1,981.12
    -14.31 (-0.72%)
     

  • 10-Yr Bond

    4.7060
    +0.0540 (+1.16%)
     

  • NASDAQ futures

    17,733.75
    +166.25 (+0.95%)
     

  • VOLATILITY

    15.67
    +0.30 (+1.95%)
     

  • FTSE

    8,115.23
    +36.37 (+0.45%)
     

  • NIKKEI 225

    37,934.76
    +306.28 (+0.81%)
     

  • CAD/EUR

    0.6820
    -0.0001 (-0.01%)
     

Why is Lululemon (LULU) Stock Plummeting 10% Today?

Madeleine Johnson
Updated

On Friday, shares of popular athleisure retailer Lululemon Athletica Inc. LULU are plummeting, down over 10% in early morning trading after the company reported its fiscal 2016 second quarter results.

Adjusted earnings per share came in at 38 cents, falling in line with the Zacks estimate and rising 11.8% year-over-year. Total revenues increased 14% to $514.5 million from $453 million in the second quarter of fiscal 2015.

Results were driven by continued momentum in Lululemon’s top line, accelerated gross margin growth, as well as efficient inventory management. Its bottom line, however, was impacted by unfavorable currency movements.

Total comparable sales, which includes comparable store sales and direct-to-consumer sales, gained 4%, or 5% on a constant dollar basis. Comparable store sales rose 3%, or 4% on a constant dollar basis, while direct-to-consumer increased 6% to $87.4 million, or 7% on a constant dollar basis.

ADVERTISEMENT

Lululemon CEO Laurent Potdevin said that "The second quarter demonstrated strong results as we delivered sales and EPS at the high-end of our guidance and saw an important inflection in our gross margin and earnings performance."

Mr. Potdevin continued, saying "Our progress in the second quarter, especially in gross margin and inventory, marks the beginning of our recovery in profitability and sustainable long term growth."

Despite this strong performance, investors were not impressed by Lululemon’s comparable sales miss and weaker-than-expected guidance. While the company’s comps gain was a bright spot for Lululemon, it fell short of analysts’ 5.8% consensus estimate.

The yoga wear maker issued soft third quarter guidance of sales of $535 million to $545 million on earnings per share of 42 cents to 44 cents.

Year-to-date, LULU stock has gained over 46%. It currently holds a #3 on the Zacks Rank.

LULULEMON ATHLT Price, Consensus and EPS Surprise

LULULEMON ATHLT Price, Consensus and EPS Surprise | LULULEMON ATHLT Quote

 

Interested in IPOs? Check out the special edition of Zacks Friday Finish Line, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about 2016’s IPO market.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
LULULEMON ATHLT (LULU): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research