By Alexandra Canal

Lululemon (LULU) reported third quarter results after the closing bell on Thursday that beat on both the top and bottom lines, sending shares of the company higher in Friday's pre-market trade.

Lululemon stock rose over 8% as the company also raised its full-year sales and profit forecasts for 2024.

Still, sales growth in North America once again declined as the retailer grapples with concerns over increased competition heading into the critical holiday shopping season.

Revenue came in at $2.40 billion, an increase from the $2.20 billion reported in the third quarter of 2023. Analysts polled by Bloomberg were expecting $2.36 billion after the retailer guided to sales between $2.34 billion and $2.37 billion.

Earnings beat estimates of $2.75 a share to hit $2.87. This was also ahead of the $2.53 EPS the company reported in the year-ago period.

The company guided to fourth quarter revenue of $3.48 billion-$3.51 billion, compared to consensus estimates of $3.5 billion. The company also sees Q4 earnings per share between $5.56 and $5.64, below estimates of $5.70.

For the full year, the retailer boosted its net revenue guidance to between $10.45 billion and $10.49 billion, up from the prior $10.38 billion-$10.48 billion range. Its forecast for earnings per share was also boosted to a range of $14.08-$14.16 for the year, higher than the prior $13.95-$14.15.

"Our performance in the third quarter shows the enduring strength of lululemon globally, as we saw continued momentum across our international markets and in Canada," Lululemon CEO Calvin McDonald said in the earnings release.

"Looking to the future, we are pleased with the start to our holiday season, and we remain focused on accelerating our US business and growing our brand awareness around the world."

Gross margins improved on a sequential basis, rising 150 basis points to 58.5% compared to an 80-basis-point jump in the second quarter. The company also said it had approved a $1 billion increase to its stock buyback program on Dec. 3.

All eyes on the competition

Heading into the report, the stock has been one of the worst performers in the S&P 500 (^GSPC) this year, plummeting over 30% as newer brands like Alo and Vuori capture market share with trendier styles and products.

Shares have also significantly underperformed the Consumer Discretionary sector (XLY), which is up about 27% over that same period.

And although the stock has rebounded from the four-year lows it faced over the summer, analysts have pointed to increased short-level interest as a catalyst — making the long-term fundamental story all the more important.

Same-store sales within North America have been hit especially hard, with the metric falling another 2% after domestic same-store sales dropped 3% in the second quarter.

Overall, same-store sales increased 4%, boosted by international markets. Analysts had anticipated year-over-year growth of 2.5%.

[Source :: Yahoo finance]