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Lululemon raises full-year forecast on menswear, online strength

Lululemon Athletica reported better-than-expected second-quarter revenue and profit on Thursday, buoyed by strength in its online and menswear businesses, helping the Canadian athletic apparel maker to raise its forecasts for the year.

Lululemon has been focusing on ramping up its online presence, expanding internationally and growing its store counts. The company’s direct-to-consumer revenue, which includes its online and mobile sales, increased 30% in the second quarter. The company, known for its trendy women’s sports apparel, has also been aiming for a larger slice of the men’s wear segment, where comparable sales grew 27% in the quarter ended Aug. 4. The growth in the men’s business was higher than the company’s total comparable sales growth of 15%, which beat analysts’ expectation of an increase of 12.2%. The yoga pants specialist said it now expects full-year net revenue of between $3.80 billion and $3.84 billion, compared with its previous forecast of $3.73 billion to $3.77 billion. The company boosted its full-year profit forecast range to $4.63 to $4.70 per share, from $4.51 to $4.58 per share. Shares of the company rose about 3% in extended trading.

Lululemon said it has seen an increase in momentum in Europe and Asia Pacific, especially in China. The company, however, said it continues to expect a 4 to 5 cents of negative impact within gross margin related to the new U.S.-China tariffs and incremental air freight costs. On a post-earnings call, Chief Financial Officer Patrick Guido said Lululemon’s exposure to China is relatively small, with about 6% of finished goods in scope for U.S. tariffs. “So going forward, we do not expect it to be a big impact to the business,” he said.

The company said it remained optimistic about the fall season and beyond. Lululemon’s revenue rose 22% to $883.4 million in the quarter ended Aug. 4, beating the average analyst estimate of $845.7 million. Excluding items, Lululemon earned 96 cents per share, beating analysts’ estimates of 89 cents. Shares of the company have gained 54.5% this year, outperforming the S&P 500 index's 18.8% rise.

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