Lululemon Athletica (LULU) rose 2.5% in late trading Monday. The company gave investors a reason to increase their holdings this week, as it struck a more optimistic tone regarding the upcoming fourth-quarter results for fiscal 2025. Management indicated that earnings and revenue are now expected to land at the high end of the previously provided guidance, driving the stock price higher.
Chief Financial Officer Meghan Frank stated that the improved outlook reflects a better-than-expected holiday season performance. Lululemon reaffirmed its fourth-quarter revenue guidance range of $3.5 billion to $3.585 billion and earnings per share (EPS) guidance of $4.66 to $4.76. The upper limit of the revenue range slightly surpassed Wall Street expectations, although the EPS guidance remains marginally below the market consensus.
This optimism follows a solid third quarter, during which Lululemon exceeded expectations with revenue of $2.57 billion and earnings per share of $2.59. However, the overall picture is not entirely clear: a decline in North American sales, with U.S. revenue dropping by 3%, was offset by a substantial 33% surge in international business.
Management uncertainty remains a backdrop: as CEO Calvin McDonald prepares to step down later this year, founder Chip Wilson is pushing for a board reshuffle. For now, investors are focused on one thing: whether the positive momentum from the holiday season can stabilize its core U.S. operations.
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