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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 5 OF 7

Lululemon Tweaks Fiscal 2017 Guidance after Its 1Q17 Results

What to expect from Lululemon in 2017

After delivering expectations-beating top and bottom lines for 1Q17, Lululemon Athletica (LULU) updated its guidance for fiscal 2017 on June 1, 2017.

The company’s management expects fiscal 2017 sales to lie in the ~$2.5 billion–$2.6 billion range, based on low single-digit growth in sales comps and 50 new stores. The sales guidance has been tweaked downward to reflect the Ivivva restructuring discussed in the previous section. The company had earlier forecasted total sales of $2.55 billion–$2.60 billion.

Lululemon Tweaks Fiscal 2017 Guidance after Its 1Q17 Results

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The normalized gross margin is projected to increase 50–100 basis points during the year, driven by product margin improvements. The company also expects around 50–100 basis points in SG&A1 deleverage.

LULU revised its outlook for its earnings per share upward to the $2.28–$2.38 range (excluding the Ivivva restructuring impact) compared to its earlier guidance of $2.26–$2.36.

This move was appreciated by investors and pushed the company’s stock price up. You can read more about LULU’s recent stock market performance in the next section.

Looking into the second quarter

For 2Q17, LULU’s earnings per share are expected to land in the $0.33–$0.35 range (excluding the Ivivva restructuring impact) versus $0.38 in 1Q16. The forecast also includes a negative impact of $0.04–$0.05 from the expenses related to Lululemon’s digital acceleration work.

Laurent Potdevin, Lululemon’s CEO, commented, “As we look to the second quarter, we’re seeing robust performance across all channels and categories with combined costs up in the low-to-mid single digits and digital back to a double-digit comp trend.”

He added, “Our current outlook for the remainder of 2017 is strong, and I’m energized by the growth strategies taking shape.”

ETF investors seeking to add exposure to LULU can consider the PowerShares Russell Midcap Pure Growth Portfolio ETF (PXMG), which invests 0.8% of its portfolio in LULU.

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