Lululemon is getting crushed (LULU)
Lululemon shares are tanking, down as much as 8% in early trading on Thursday.
The company reported second-quarter results that were, in fact, solid overall: Adjusted earnings per share of 34 cents barely beat the estimate for 33 cents, according to Bloomberg.
Revenues for the maker of yoga pants were $453 million, up 16% compared to the prior year, and topping the forecast for $445 million.
However, gross margins, which are revenues excluding the cost of goods sold, fell to 46.8% from 50.5% a year ago.
The company recently hiked the prices of its yoga pants, even amid rising competition from other makers of athletic wear like Gap and Under Armor.
Comparable sales – at stores open for at least one year – rose 6% on a constant dollar basis, in line with estimates and after a 1% drop in the first quarter.
The company also raised its full-year guidance for sales and earnings, and expects net revenues to be between $2.03 billion and $2.05 billion.
The stock has had quite the run this year, and is up 15%. Over the past 12 months, it has rallied 63%.
In a note on Tuesday, Deutsche Bank analysts wrote in a client note that the company weathered the recent big sell off in stocks better than most others they covered. And so, expectations were set quite high ahead of the release.
In the earnings release, CEO Laurent Potdevin said: "We exceeded our revenue targets for the past quarter, supported by strong performance from both our store and e-commerce channels. Looking to the remainder of the year, our team is laser focused on meeting our strategic key goals: grow our global collective, relentlessly innovate our product lines and continue to create transformational experiences for our guests."
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