Lululemon Athletica sales impress: shares jump 16%

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lululemon Athletica sales impress shares jump 16%

Lululemon shares surged after third quarter earnings beat estimates. TheStreet’s Jim Cramer said Lululemon may be at an inflection point, growing into a global clothing company with expansion in London and China. TheStreet’s Scott Gamm reports. Newslook

Lululemon shares were up about 16% Thursday after the exercise clothing retailer’s better-than expected sales report for the third quarter.

The Vancouver-based company on Wednesday reported higher than expected sales during the August-October period of $544.4 million, up 13% over the same period last year. That revenue surpassed Wall Street estimates of $540 million, based on analysts surveyed by S&P Global Market Intelligence.

Net income rose to $68.3 million, or 50 cents a share, compared to $53.2 million, or 38 cents, a year ago.

Lululemon (LULU) shares were up $9.48 to $69.32 at midday; the stock closed Wednesday at $59.84 up 4.5%.

CEO Laurent Potdevin noted that fourth quarter holiday sales were strengthening after a mixed November —  Black Friday sales were up 16% and Cyber Monday up 29% —  and that the company was “on track” with its five-year plan to double revenue by 2020. The company is opening its first three stores in China, two in Shanghai and one in Beijing, he said.

Comparable store sales, including same-store sales and direct to consumer sales, rose 7%. Same-store sales, or sales for stores open more than one year, were up 4%. Among product lines, Potdevin said that revenue for women’s bras grew more than 20% and during a call with investment analysts Wednesday hinted at a “fantastic innovation in the bra category in 2017.”

Mizuho Securities Managing Director for Americas Research Betty Chen upgraded Lululemon stock to Buy from Neutral with a target price of $78. “We are impressed with the company’s ability to deliver both positive store comps and 16% e-commerce growth despite industry average traffic decline (in the mid-single digits),” she wrote in a note to investors Wednesday.

Product innovation and a growing share in men’s sales should help the retailer maintain its sales trends over the next fiscal year, she said, noting that sales have increased 10.5% on average per quarter over the last five years.

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