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Lululemon Stock Surges 11.5% after Its 1Q17 Results

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Lululemon Stock Surges 11.5% after Its 1Q17 Results PART 2 OF 7

Chart in Focus: Lululemon’s 1Q17 Top Line Beat

Lululemon’s 1Q17 top line

Lululemon Athletica (LULU) reported its 1Q17 results on June 1, 2017, posting a 5% YoY (year-over-year) jump in its top line to $520 million. LULU performed better than analyst expectations of a 4% sales increase to $515 million and its guidance of $510 million–$515 million in total sales.

Chart in Focus: Lululemon’s 1Q17 Top Line Beat

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LULU’s larger competitor Nike (NKE) reported a 5% YoY rise in quarterly sales to ~$8.4 billion when it reported its results in March. However, the company narrowly missed its consensus.

Under Armour (UAA) also reported better-than-expected results. Its top line increased 7% to $1.1 billion, beating the consensus by $8 million.

What drove Lululemon’s 1Q17 sales?

Lululemon’s (LULU) 1Q17 top line was driven by a 10% increase in square footage. The company opened 38 net new stores since 1Q16, which included 22 stores in the US, three in Canada, eight in Asia, and five in Europe.

This trend was partially offset by a decline in comparable sales and a negative currency impact. LULU’s sales comps were down 1%, with brick-and-mortar comps falling 1% and its e-commerce comps remaining flat.

The company’s sales comps were significantly lower during the quarter compared with average comps of ~8% over the last two years. However, the management had warned of a slower first quarter with weak online sales and lower foot traffic in its stores.

Foreign currency negatively impacted the top line by $1.5 million (or 0.3%). ETF investors seeking to add exposure to LULU can consider the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.4% of its portfolio in LULU.

In the next article, we’ll look at Lululemon’s margins and profitability in 1Q17.

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