The company raised expectations for diluted EPS from a range of $0.40 to $0.42 to between $0.47 and $0.49, about a 17% hike. Revenue guidance also moved up almost 10% from about $330 million to around $360 million. The increased revenue represents a nearly 47% growth over last year's fourth-quarter total of $245 million. Even better, management projected same-store sales to move up by a low-to-mid 20s percentage, above previous expectations. Declining same-store sales had concerned investors earlier.
The improved guidance is welcome news for the apparel seller after it stirred controversy with its "Who is John Galt?" shopping bags earlier in the quarter, and the founder, Dennis Wilson, announced his departure as the chief innovation and branding officer and sold over $12 million in shares. Wilson will remain as chairman of the board.
Investors seemed unfazed by Wilson's move, as the stock did not react to the news. CEO Christine Day has been at the helm since 2008, overseeing dramatic growth during her tenure.
Recently, Lululemon's stock has risen almost 50% from the $41.70 price on Dec. 1, when the company reported that third-quarter revenue missed expectations by about 2%. Day had blamed the sales miss on inventory problems, which prevented stores from meeting sales demand, but she promised a strong fourth quarter with the right product mix -- and sure enough, she delivered. Day credited the higher fourth-quarter sales to the company's improved inventory, saying, "Our work throughout the year building our inventory position is driving our success in the fourth quarter," and added that momentum would continue into the spring. It's reassuring to see a CEO pinpoint a problem and solve it in the next quarter, as advertised.
One of these things is not like the others
The apparel retailer's success comes at a time when other familiar clothing chains are struggling. Urban Outfitters
With stellar comps, a 71% growth rate in online sales in the third quarter, and a number of new stores to come -- they added 18 in Q3 alone -- investors can bet that Lululemon will live up to that high multiple.
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Fool contributor Jeremy Bowman holds no positions in the above companies. The Motley Fool owns shares of Lululemon, Gap, and Aeropostale. Motley Fool newsletter services have recommended buying shares of Lululemon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.