File photo of a Lululemon store in Vancouver.
At least Lululemon Athletica Inc. shares were rallying on Tuesday with something more substantial than an analyst's upgrade behind them. The shares were up 12.4 per cent in afternoon trading, hitting a new record high, after the yoga-wear retailer raised its guidance for the current quarter.
Lululemon now expects sales of at least $358-million (U.S.) for the quarter ending Jan. 29. That's up $30-million from earlier guidance. The company also boosted its earnings guidance by 7 cents a share.
The rebound in the share price has been nothing short of stunning over the past four weeks, with a total gain of 35 per cent. Just this year alone – all six trading sessions of it – the shares have risen 29 per cent. Tuesday's gain marks the biggest one-day pop since December 2010.
The rebound comes after a dismal second half of the year in 2011, when investors fretted over concerns about rising inventory levels and the prospect of shrinking profit margins. And, of course, investors have been occasionally wary of the stock in recent years, with concerns that the recession would wean consumers off the need for high-priced yoga pants.
Last week, though, the stock enjoyed a big one-day rally when Goldman Sachs added Lululemon to its Conviction List of best investment ideas, downplaying some of the concerns about the company and forecasting big returns ahead. Now, with investors on board and the stock at a new record high, Lululemon can't disappoint -- or else.
David Berman