Athletic apparel retailer, Lululemon, reported better-than-expected earnings and revenue for its first fiscal quarter, surpassing Wall Street estimates. However, the company issued weak guidance for the current quarter as it grapples with a slowdown in its largest market, the Americas.

Lululemon announced earnings per share of $2.54, exceeding analysts' expectations of $2.38. The company also reported revenue of $2.21 billion, narrowly beating the estimated $2.19 billion. Despite the positive results, Lululemon's growth in the Americas appears to be stalling, with flat comparable sales reported for the region.

Last quarter, the company faced challenges when it failed to stock the right sizes and colors in U.S. stores, impacting sales. CEO Calvin McDonald acknowledged the need for improvement in the Americas and emphasized the strong growth the company is experiencing in international markets.

While Lululemon's stock surged by 10% in extended trading on Wednesday, concerns about its growth prospects remain. The company's reported net income for the quarter was $321 million, compared to $290 million in the same period last year. Sales rose by approximately 10% to $2.21 billion.

McDonald highlighted the company's efforts to optimize its U.S. product assortment but acknowledged ongoing issues with inventory management, particularly regarding leggings and popular sizes. He expects the company to improve its inventory position in the second half of the year.

Despite the challenges in the Americas, Lululemon provided full-year guidance that suggests optimism for improving conditions in the latter half of the year. The company expects earnings per share to be between $14.27 and $14.47, above analysts' expectations of $14.11. Revenue is projected to be between $10.7 billion and $10.8 billion, aligning with expectations.

Lululemon, known for its strong brand reputation and market leadership, has seen its stock decline by 40% year-to-date. Investors have raised concerns about the company's growth prospects, which were further fueled by the resignation of its chief product officer, Sun Choe.

Moreover, the rise of denim as a major trend among consumers has sparked worries that Lululemon may face competition from traditional jeans brands, potentially impacting its market share.

Despite the challenges, Lululemon remains confident in its ability to deliver and sees significant growth opportunities ahead. As the company navigates through its current hurdles, investors and analysts will closely monitor its progress in revitalizing growth in the Americas.

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