Lululemon Athletica drops 3% after failing to raise guidance despite earnings beat

investing.com:

Investing.com — Lululemon Athletica (NASDAQ:LULU) reported fiscal third-quarter results that topped Wall Street estimates, but the athletic apparel maker's revenue guidance for the holiday season quarter fell short of estimates.

Lululemon Athletica Inc (LULU) fell more than 2.5% in pre-market Friday following the results.

The company reported adjusted EPS of $2.53 on revenue of $2.2 billion. Analysts polled by Investing.com anticipated EPS of $2.28 on revenue of $2.19B.

Comparable sales increased 13%, with direct-to-consumer net revenue up 18%. Gross margin increased 110 basis points to 57%.

For Q2, the company sees diluted EPS in the range of $4.85 to $4.93, in-line with estimates of $4.93 per share and revenue in the range of $3.14B to $3.17B, missing estimates of $3.18B.

On Nov. 29, the company approved an additional stock buyback program for up to $1B.

Analysts at Oppenheimer said the results suggest the company is «resilient amid macro pressures.»

«Looking closer into 2024, we are now even more upbeat upon nearer-term fundamental prospects for LULU, particularly as macro pressures continue to abate, and the likelihood of investors to award shares a higher multiple, more reflective of the company’s superior fundamental prowess,» they said.

Lululemon is a Top Pick within Oppenheimer's Consumer Growth & eCommerce research coverage.

Analysts at Bernstein said investors are likely disappointed that LULU didn't raise FY guidance after the Q3 beat.

While they remain Market Perform-rated on LULU stock «given the run-up in valuation since October,» the price target was lifted by $34 to $400 per share to reflect the recent S&P500 index inclusion.