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Lululemon Athletica — a downward dog no longer

By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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September 11, 2014, 8:26 AM ET
Lululemon Founder To Step Down After Commments About The Brand's Customers Bodies
MIAMI BEACH, FL - DECEMBER 10: Amy Steiner (C) leads a yoga class while dressed in Lululemon Athletica yoga clothes at the Green Monkey yoga studio on December 10, 2013 in Miami Beach, Florida. Lululemon Athletica, Inc. announced today that it is naming Laurent Potdevin as their new chief executive and said founder Chip Wilson will step down as chairman. (Photo by Joe Raedle/Getty Images)Photo by Joe Raedle—Getty Images
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Lululemon Athletica is in warrior pose.

Shares of the yoga-gear maker jumped in pre-market trading Thursday after the company reported stronger-than-expected second-quarter results in an early sign of a turnaround at the beleaguered company.

Known for selling high-priced yoga and running gear, Lululemon is angling to move forward from a debacle last year when it was forced to recall some of its popular pants due to excessive sheerness.

Results for the second quarter, which ended Aug. 3, were strong across the board. Net revenue increased 13% to $390.7 million and per-share earnings for the latest period were 33 cents, both exceeding the targets Lululemon (LULU) had outlined in July. The company also raised some of its financial targets for the year.

“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,” said CEO Laurent Potdevin.

Part of the reason Lululemon has churned out such strong revenue growth is rising consumer interest in athletic apparel, even if the consumers are wearing gear without participating in the sport. Activewear sales leapt 9% in the U.S. last year, while the total apparel market only grew by 2% over the same period, NPD Group reported.

Lululemon’s strength mirrors what other major athletic-gear purveyors have reported. Under Armour’s (UA) overall apparel sales leapt 35% in the latest quarter, while Nike’s (NKE) North American apparel sales were recently up 9%.

The strong results are also the first since a spat with founder Chip Wilson that began in June appeared to subside, at least for now. Wilson, who had in June claimed management was too focused on short-term results, reached a temporary truce last month when he agreed to sell half of his stake in the company in a deal that prevents a proxy war until at least 2016.

About the Author
By John KellContributing Writer and author of CIO Intelligence

John Kell is a contributing writer for Fortune and author of Fortune’s CIO Intelligence newsletter.

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