Lululemon's profits and sales top Wall Street's expectations - again

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• Lululemon shares jumped late Wednesday after the retailer reported better-than-expected first-quarter results.
• Profits and revenue topped analysts' expectations, though guidance came in lower than expected.
• Shares have risen 40% this year, handily outperforming the broader market.
• Watch Lululemon trade live.

Lululemon reported a second-straight quarter that impressed investors, sending shares higher by 3% late Wednesday.

The athleisure retailer's first-quarter profits and sales topped analysts' expectations, while its full-year earnings-per-share guidance came in lighter than was forecast. The strong headline numbers followed last quarter's blowout results that sent the stock soaring back in March.

"Lululemon continues to see strong momentum across the entire business," Calvin McDonald, the company's chief executive officer, said in the statement.

The quarterly results highlight Lululemon shares' breakneck rally in recent years as the market has bet on investors embracing athletic apparel, as well as the company's push beyond its core women's athleisure offerings. The stock has soared 230% over the past two years, handily outperforming the broader market's 19% gain during that time.

Here's what Lululemon reported ,compared with what analysts surveyed by Bloomberg were expecting:

• Revenue: $782.3 million ($756 million expected)
• Adjusted earnings per share: $0.74 ($0.70 expected)
• Full-year EPS guidance: $4.51 to $4.58 (the company originally expected $4.48 to $4.55)

Wall Street expects profits and sales to rise over the next three quarters, according to Bloomberg estimates, with analysts broadly positive on the retailer. Of those polled by Bloomberg, 21 recommend "buy," 13 recommend "hold," and one says "sell." The average analyst's price target of $184.77 implies a rally of 8% from current levels.

While investors are likely to focus on near-term trends, Lululemon is well-positioned for the long-term, Credit Suisse analysts wrote Wednesday. The firm is encouraged by Lululemon's efforts in menswear, its international expansion, and the loyalty program it debuted late last year.

John Morris, an analyst at D.A. Davidson, lifted his earnings-per-share estimates last month as a result of his positive outlook for Lulu's merchandising margins. He holds a "neutral" rating on the stock.

"Given the strength of average pricing remaining higher on both total average price and markdown average price, expecting gross margin to exceed consensus, although this is likely factored into the stock," Morris wrote.

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