Bullish stock to watch: Lululemon Athletica inc. (NASDAQ: LULU)

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Lululemon Athletica inc. (NASDAQ: LULU) stock rose over 1.2% in the pre-market session on 7th December, 2018 (Source: Google finance) after the company posted better than expected results for the third quarter of 2018. The company ended the third quarter of fiscal 2018 with $703.6 million in cash and cash equivalents compared to $650.1 million at the end of the third quarter of fiscal 2017. The company ended the quarter with 426 stores. Income from operations was $135.9 million, an increase of 59 percent compared to the third quarter of fiscal 2017. Operating margin was 18.2 percent, an increase of 440 basis points compared to the third quarter of fiscal 2017.

The company ended the third quarter of fiscal 2018 with $703.6 million in cash and cash equivalents compared to $650.1 million at the end of the third quarter of fiscal 2017. Inventories at the end of the third quarter of fiscal 2018 increased 25 percent to $496.0 million compared to $396.9 million at the end of the third quarter of fiscal 2017.

LULU in the third quarter of FY 18 has reported the adjusted earnings per share of 71 cents, beating the analysts’ estimates for the adjusted earnings per share of 70 cents, according to figures compiled by Thomson Reuters . The company had reported the adjusted revenue growth of 20.8 percent to $747.66 million in the third quarter of FY 18. Total comparable sales increased 17 percent, or increased 18 percent on a constant dollar basis. Comparable store sales increased 6 percent, or increased 7 percent on a constant dollar basis. Direct to consumer net revenue increased 44 percent, or increased 46 percent on a constant dollar basis. Direct to consumer net revenue represented 25.3 percent of total net revenue compared to 21.2 percent for the third quarter of fiscal 2017.

For the fourth quarter of fiscal 2018, LULU expect net revenue to be in the range of $1.115 billion to $1.125 billion based on a total comparable sales increase in the high-single to low-double digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $1.64 to $1.67 for the quarter.

For the full fiscal 2018, LULU now expect net revenue to be in the range of $3.235 billion to $3.245 billion based on a total comparable sales increase in the mid-teens on a constant dollar basis. Diluted earnings per share are expected to be in the range of $3.61 to $3.64 for the full year, based on a 30.2 percent effective tax rate.

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