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Yogawear retailer Lululemon Athletica Inc's logo is pictured at its store in downtown Vancouver in this file photo.Reuters

Canadian athletic apparel maker Lululemon Athletica on Tuesday posted a surprisingly strong fourth-quarter profit and forecast further growth in the first quarter, sending its shares surging in after-hours trading.

The Vancouver-based company estimated first-quarter earnings of 44 to 46 cents per share on revenue of $612-million to $617-million, driven by an expected rise in comparable sales in the low-double digits. That compares with per-share adjusted earnings of 32 cents on revenue of $520.3 million a year earlier.

The stock jumped 8.9 per cent in after-hours trading, following a 2 per cent decline during the day to $78.71, after Lululemon reported a 33 per cent increase in adjusted earnings and a 290 basis point rise in adjusted operating margins to 27.8 per cent.

The gains came as Lululemon navigates top-management changes following the abrupt resignation of Chief Executive Laurent Potdevin last month on undisclosed charges of misconduct.

The company is continuing its CEO search and has had “a number of great candidates,” Chairman Glenn Murphy, who became executive chairman on Potdevin’s departure, said on a teleconference on Tuesday.

Lululemon, which popularized “athleisure wear” by turning pricey women’s yoga wear into mainstream fashion, is seeking to shore up profits as it faces growing competition from brands including Under Armour Inc, Nike Inc and Gap Inc .

It has restructured its money-losing Ivivva brand, turning it into a primarily e-commerce operation, boosted investment in its online and international businesses and expanded its men’s offerings.

Total comparable store sales rose 7 per cent, while rising sales in the e-commerce business after a relaunch of its websites in the third quarter contributed to revenue growth in the direct-to-consumer business, the company said in a statement.

It reported adjusted earnings of $1.33 per share in the three months ended Jan. 28, up from $1 a year earlier as revenue increased 18 per cent to $928.8-million. Including the effect of restructuring charges related to Ivivva and a U.S. tax overhaul, net income fell to $119.8-million, or $88 cents per share, from $136.1-million, or 99 cents, a year earlier.

Analysts had expected adjusted net income of $1.27 per share, and revenue of $912.4-million, according to Thomson Reuters I/B/E/S.

For the fiscal year, the company reported an increase in adjusted earnings to $2.59 per share, versus $2.14 a year earlier. It forecast earnings per share of between $3 and $3.08 for the full year on revenue of $2.985-billion to $3.022-billion.

“We are seeing strong momentum across our business as we now move into 2018, which is further positioning us to achieve our 2020 revenue goal of $4-billion,” Chief Operating Officer Stuart Haselden said in the statement.

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SymbolName% changeLast
LULU-Q
Lululemon Athletica
+0.31%390.65

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