Lululemon's international sales boost offset slowing U.S. sales, causing stock to rise.

• Lululemon beat Wall Street's expectations on the top and bottom lines.
• The retailer of athletic apparel, renowned for its yoga pants and belt bags, provided holiday advice that met expectations.
• Despite being its largest market, the company's sales in the Americas have begun to decline, while its sales are increasing overseas.

Despite the slowing growth of the U.S. market, the athletic apparel retailer is experiencing a 9% increase in sales year over year due to its success abroad.

On Thursday, the yoga pants company surpassed Wall Street's expectations on both the top and bottom lines, and expressed satisfaction with the beginning of the holiday season.

Lululemon's fiscal third quarter performance exceeded analysts' expectations, as per a survey by LSEG.

• Earnings per share: $2.87 vs. $2.69 expected
• Revenue: $2.40 billion vs. $2.36 billion expected

Shares climbed about 8% in extended trading Thursday.

In the three-month period ending October 27, the company's net income was reported as $352 million, which amounts to $2.87 per share, a significant increase from the $249 million, or $1.96 per share, recorded in the same period a year prior.

Sales increased by 9% to $2.40 billion from $2.20 billion the previous year.

Lululemon anticipates revenue growth of 8% to 10% in the all-important holiday shopping quarter, with revenue expected to be between $3.48 billion and $3.51 billion. This is slightly below analysts' expectations of $3.50 billion, or growth of 9.1%, which is roughly in line with the midpoint of the guidance.

According to LSEG, the high end of the expected earnings per share range is ahead of the $5.59 analysts had predicted, with the range being between $5.56 and $5.64.

Lululemon adjusted its revenue guidance for the full year and raised it slightly. It now anticipates fiscal 2024 revenue to fall between $10.45 billion and $10.49 billion, compared to its previous guidance of between $10.38 billion and $10.48 billion. This outlook surpasses the $10.44 billion that Wall Street had predicted, according to LSG.

The company is expected to report earnings per share between $14.08 and $14.16, higher than the $13.97 analysts had predicted.

Lululemon has experienced a slowdown in growth over the past year, with the competitive landscape becoming increasingly challenging. Despite this, the company is still expanding, but at a slower pace than before. Lululemon has long faced competition from established players like , s Athleta and 's Beyond Yoga, but now faces new threats from disruptors such as Vuori and Alo Yoga.

The company has shifted its focus to China for growth, resulting in a 4% increase in company-wide comparable sales during the quarter, surpassing the 3.2% growth predicted by Wall Street, as reported by StreetAccount.

Despite a 2% slowdown in comparable sales in the U.S. and a 25% increase internationally, Lululemon's overall revenue grew 2% in the Americas and 33% internationally. However, the Americas still account for the majority of Lululemon's revenue, while international sales remain a smaller portion.

Lululemon has faced some self-inflicted challenges, including a failed high-profile product launch and missing out on sales in the U.S. due to not offering the desired colors and sizes for its core customers.

In August, CEO Calvin McDonald stated that the brand's strength in the U.S. market remains unchanged, but the women's business has slowed due to a lack of new styles to attract customers.

The departure of Lululemon's longtime chief product office Sun Choe, who resigned in May and joined another company, coincided with a time when consumers are more selective and less tolerant of mistakes due to persistent inflation and an economy that feels worse than it actually is.

Lululemon has increased its stock repurchase program by $1 billion to keep Wall Street content amid its rough patch. As of Thursday, it had approximately $1.8 billion remaining in the program.

Despite unpredictable consumer demand, Lululemon has prioritized increasing profitability. In the third quarter, Lululemon's gross margin surpassed expectations, rising by 1.5 percentage points to 58.5%, compared to the anticipated 57.5%, as reported by StreetAccount.