Lululemon stock up 17% on better-than-expected earnings

Lululemon Athletica Inc. stock shot up 17 per cent on Thursday morning, after it reported better-than-feared earnings.

The yoga wear retailer's second-quarter profit of $48.7 million or 33 cents a share was lower than the same quarter last year, when it made compared with $56.4 million, or 39 cents per share.

But investors had feared a steep slide after a tumultuous year in which founder Chip Wilson was ousted and then came back to shake up the board.

Lululemon shares were trading up $6.60 at $45 US on the Nasdaq this morning.

Revenue for the quarter was up 13 per cent to $390.7 million from $344.5 million year-over-year.

Total comparable sales, which includes comparable store sales and direct to consumer, remained flat for the second quarter, Lululemon  said.

That's a surprising result considering the company has to restore its reputation after a scandal over its sheer pants and inappropriate marks by Wilson about why some women shouldn't wear Lulu clothing. Then, this spring, its message about sunscreen printed on its bags ran into controversy.

"We are pleased to be on track with the implementation of our strategic road map, and are starting to see the results of our work across product, brand and international expansion." CEO Laurent Potdevin said in a news release.

"While there is still much to be done, we are making meaningful progress on building a scalable foundation for our next phase of global growth...," he said.

Potdevin was hired in late 2013 after problems related to a style of yoga pants that had fabric which was criticized as being too sheer. Company founder Chip Wilson had said in a TV interview in November 2013 November that some women's bodies didn't suit Lululemon's tight-fitting yoga pants.  

In June, Wilson was involved in a boardroom controversy when he voted against the re-election of two of the company's directors.

The company faces increasing competition from retailers selling yoga wear.

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