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Lululemon Athletica Q3 Profit Surges - Update

Lululemon Athletica Inc. (LULU) on Thursday reported a third-quarter profit that surged from a year ago, driven largely by strong revenues and gross margin growth. Earnings for the quarter trumped Wall Street estimates by a penny, while revenues also surpassed expectations. Moving ahead, the yoga apparel maker lifted its fiscal year guidance.

Vancouver-based Lululemon's third-quarter profit surged to $94.4 million or $0.71 per share from $58.9 million or $0.43 per share last year. Analysts polled by Thomson Reuters estimated earnings of $0.70 per share.

Revenues for the quarter jumped 21 percent to $747.7 million from $619.0 million last year. On a constant dollar basis, revenues increased 22 percent. Analysts had a consensus revenue estimate of $737.45 million for the quarter.

Total comparable sales increased 17 percent, with comparable store sales up 6 percent and direct to consumer revenues up 44 percent. Gross margin improved 240 basis points to 54.4 percent.

Stuart Haselden, Chief Operating Officer, commented, "We're pleased with our Q3 results and the strong momentum we continue to see across our business. These results reflect the strategic investments we've made, and continue to make, to achieve our long-term growth objectives."

Looking forward to fourth quarter, Lululemon expects earnings of $1.64 to $1.67 per share and revenues of $1.115 billion to $1.125 billion. Analysts currently estimate earnings of $1.65 per share and revenues of $1.12 billion for the quarter.

For the full year 2018, the company now expect adjusted earnings of $3.65 to $3.68 per share and revenues of $3.235 billion to $3.245 billion. Analysts currently estimate earnings of $3.60 per share and revenues of $3.23 billion.

Earlier, the company expected earnings of $3.45 to $3.53 per share and revenues of $3.185 billion to $3.235 billion.

LULU closed Thursday's trading at $131.44, down $2.18 or 1.63%, on the Nasdaq. The stock, however, gained $0.89 or 0.68% in the after-hours trade.

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