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Could Lululemon Athletica Have Another Strong Quarter in 2Q17?

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Part 2
Could Lululemon Athletica Have Another Strong Quarter in 2Q17? PART 2 OF 5

Lululemon’s Top Line Is Expected to Rise 10% in 2Q17

What to expect from Lululemon in 2Q17

As we discussed previously, Lululemon Athletica (LULU) is slated to report its 2Q17 results on August 31, 2017. Management expects its revenues to be $565 million–$570 million—increasing 10.3% YoY (year-over-year) at the mid-point.

The growth will likely be driven by a low to mid-single digit rate increase in comparable sales (on a constant dollar basis) and eight new store openings. The e-commerce channel is expected to remain strong and grow at a low to mid-teen rate during the quarter.

Lululemon’s Top Line Is Expected to Rise 10% in 2Q17

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Analysts’ expectations for the quarter are in line with management’s expectations. On average, analysts expect Lululemon’s top line to expand 10.3% to $567.5 million.

1Q17 performance

During 1Q17, Lululemon recorded a 5% rise YoY in its top line to $520 million. The growth was driven by a 10% increase in square footage. The company opened 38 net new stores during the quarter.

However, sales comps were negative at -1%. Online sales were also weak because the comps remained flat during the quarter.

How have its competitors fared lately?

Sportswear manufacturers have had a strong earning season this quarter. Nike (NKE), Columbia Sportswear (COLM), and Under Armour (UAA) cruised ahead of Wall Street analysts’ top line expectations.

Lululemon’s expected top line growth will likely be better than the previously mentioned companies’ recent performances. Lululemon’s sales are predicted to rise 10.3% YoY. In comparison, Nike, Under Armour, and Columbia Sportswear recorded sales growth of 8.7%, 5.3%, and 2.6%, respectively, in their last reported quarter.

ETF investors seeking to gain exposure to Lululemon can consider the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.4% of its portfolio in the company.

In the next part, we’ll discuss Lululemon’s expected bottom line performance.

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