Lululemon (LULU) is back in the spotlight with a bang! The athleisure giant's stock shot up over 10% in after-hours trading on June 5, 2024, following an upbeat revision of its full-year profit outlook and a substantial $1 billion boost in its stock repurchase program.

With the new earnings-per-share (EPS) forecast now ranging from $14.27 to $14.47—up from the prior $14 to $14.20—Lululemon is making a strong case for investor confidence. It also reaffirmed its full-year revenue forecast of $10.7 billion to $10.8 billion.

This news comes as a shot of adrenaline amidst investor anxieties over competitive pressure from ascendant brands like Alo and Vuori, and concerns about slowed sales growth in the athleisure market. Before this announcement, Lululemon’s stock had nosedived about 40% since the start of 2024, positioning it as one of the worst performers in the S&P 500.

Aneesha Sherman, a Senior Analyst at Bernstein, labeled the stock's after-hours surge as a "relief rally." She noted that the market had been bracing for gloom, but this news dispelled some fears. Lululemon's share price, which closed the regular trading session at $308.27, rocketed to $347.43 in after-hours trading—a staggering 12.70% gain.

Lululemon had enjoyed a pandemic-driven consumer rush for casual wear, but recent quarters have shown softening growth rates. Year-over-year revenue growth registered at 16% in Q4 and dipped to 10% in the most recent quarter, reflecting a decelerating trend.

Wedbush analyst Tom Nikic had flagged Lululemon as a "notable laggard" due to stiff competition from new players like Alo and Vuori, which are biting into LULU's U.S. market share. The stock took a 7% hit in May after Chief Product Officer Sun Choe announced her exit from the company. This fueled further bearish sentiment, particularly from Jefferies analyst Randal Konik, who criticized the company’s product lineup as "falling flat."

But it wasn't all doom and gloom in Q1. Lululemon's revenue hit $2.21 billion, barely edging out Wall Street’s $2.20 billion estimate. Even better, their EPS of $2.54 handily surpassed the anticipated $2.39. However, North American comparable sales were stagnant, raising eyebrows and flashing a caution signal for future quarters.

Sherman pointed out the importance of international sales in balancing tepid U.S. results, noting that global markets had indeed offset domestic slack this quarter. Yet, Konik remains skeptical about sustainable international growth. "What matters is US revs continue to slow and share is being lost to Alo and Vuori," wrote Konik. He’s dubious about whether the after-hour gains can hold, given the fading U.S. momentum and suspected pressure on profit margins.

As Lululemon ventures through increasingly competitive terrain, all eyes will be on how it leverages its updated profit forecast and aggressive buyback plan to maintain—and hopefully extend—this sudden jolt of confidence. Stay tuned, because the athleisure clash is just getting started.