Lululemon said earnings soared 45.5% to 32 cents a share, beating views by 2 cents. Sales jumped 53% to $285.7 million, above forecasts of $270.85 million. It was the second straight quarter of faster revenue growth.
Same-store sales rose 25%. Online sales almost tripled, accounting for 13.5% of revenue vs. 7.4% a year earlier.
But Lululemon sees Q2 EPS of only 28-30 cents, below Street forecasts of 33 cents. That would be roughly an 11.5% rise, the smallest gain in three years.
It sees low-double-digit same-store sales growth.
The apparel clothier expects full-year EPS of $1.55-$1.60. Analysts forecast $1.63.
Lululemon shares dived 8.8% to 63.84.
"The investment community has gotten ahead of itself on the stock," said Jaime Katz, analyst at Morningstar.
Lululemon is stressing "product innovation instead of chasing sales," said Liz Dunn, an analyst at Macquarie Equities Research. She doesn't see big sales outperformance until at least Q4.
Lululemon's Q2 guidance is conservative, Katz believes. She doesn't expect high-end shoppers to stop spending.
Lululemon's clientele continued to shell out $80 or more for yoga pants, even in a down market. Consumers, especially women, have been willing to spend on items to improve their appearance and feel better about themselves. Beauty product retailers Ulta Beauty (ULTA - News) and Sally Beauty Holding (SBH - News) recently topped profit expectations.
Customers in Q1 were able to get their hands on popular items as Lulu corrected past inventory shortages, helping boost sales.
"Our guests responded well to our spring styles and colors," added CEO Christine Day in a statement.
Lululemon serves a niche in women's activewear focusing on stylish yet functional workout clothing that flatters a woman's figure. Under Armour (UA - News) has been trying to gain market share with its new, more tailored fit in women's clothing, but it continues to be more popular with men.
Lululemon is trying to expand into other exercise apparel besides traditional yoga gear. It plans to open eight "pods" — dedicated floor space in its stores for specific gear like cycling.
"If they hit the right market segment with what products they choose (these pods) could be a home run," Katz said. "Their warm weather stuff could be interesting."