Lululemon’s stock (LULU) surged by up to 14% on Friday following a stronger-than-expected Q3 earnings report, with sales hitting $2.56 billion—7% greater than the previous year and exceeding estimates of $2.48 billion. The growth was driven by a 33% increase in international revenue, although sales in the Americas dipped by 2%. The company’s EPS was $2.59, surpassing expectations of $2.22 despite a decline from $2.87 a year prior.
In response to robust performance, Lululemon raised its annual sales forecast to $10.96-$11.05 billion, up from $10.85-$11 billion, and increased EPS guidance to $12.92-$13.02. Additionally, Lululemon authorized a $1 billion stock repurchase plan and announced CEO Calvin McDonald will step down by January. The company’s operating margin decreased to 17%, and its free cash flow conversion rate fell to 72.9% from a preferred level of 80% or higher.
As of Q3, Lululemon has opened 14 new stores, bringing its total to 730 globally. The company continues to focus on international and digital sales expansion as part of its strategy for long-term growth.
