By Christiana Sciaudone
Investing.com -- Transparency hasn't been kind to Lululemon Athletica Inc (NASDAQ:LULU).
The popular retailer of yoga pants and other athletic attire smashed through analyst expectations for its quarterly results, but a cautious tone by the head of the company during the earnings conference call this week prompted a sell-off in the shares, which tumbled 10% on Wednesday.
"I'd like to reiterate that we are cautiously optimistic with regard to the holiday season," said Chief Executive Officer Calvin McDonald during the earnings call. "Our starting point is that the environment remains uncertain. COVID is not yet contained in many of the markets where we operate, and while we expect the recovery to advance, we continue to plan for multiple scenarios this fall and particularly for the holiday season."
Lulu has navigated through tricky situations before. In 2013, the company was forced to recall pants for being made with see-through fabric. That was followed by founder Chip Wilson placing the blame for the transparent pants on women's bodies. Those comments helped lead to his departure from the company.
Lululemon reported earnings per share of 74 cents compared to the expected 54 cents on sales of $902.94 million, versus the estimated $842.31 million.
Peer American Eagle (NYSE:AEO) also reported stellar results, with a loss per share of 8 cents compared to the expected loss of 17 cents, on sales of $884 million versus the estimated $808.77 million.
Sales were supported by the Aerie brand, which makes activewear, apparel and intimates.
“In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business," said Chief Executive Officer Jay Schottenstein in a statement. "Aerie was simply outstanding, fueled by strong demand, with revenue rising 32% and record margins, demonstrating the power of the brand and signaling the vast opportunity ahead. Across brands, digital sales accelerated and we successfully reopened stores during the quarter.”