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Could Lululemon Have Above-Category Growth in Fiscal 2017?

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Lululemon’s fiscal 2017 guidance

In fiscal 2017, Lululemon Athletica (LULU) expects to grow revenue 10.9%–13.3%, or $2.29 billion–$2.34 billion. Same-store sales growth is expected in the mid-single-digit range. Diluted EPS (earnings per share) is expected to come in at $2.05–$2.15, an implied growth rate of 8.5%–13.8% year-over-year. The company expects adverse foreign exchange movements to reduce EPS by $0.06.

In the first quarter of the fiscal year, revenue of $483 million–$488 million is expected, an implied growth rate of 14%–15.2% over fiscal 1Q16. Diluted EPS is expected to be $0.28–$0.30, down from $0.34 in fiscal 1Q16. Consensus Wall Street analyst estimates project sales of $486 million and adjusted EPS of $0.34 for Lululemon in fiscal 1Q17.

Lululemon expects to open 44 new stores in fiscal 2017, including up to 11 stores outside of North America. In fiscal 1Q17, eight new stores are scheduled to open.

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What is Wall Street projecting for Lululemon and peers?

Consensus Wall Street analyst estimates are skewed toward the higher end of Lululemon’s guidance range. They project sales of $2.3 billion and adjusted EPS of $2.16 in fiscal 2017. That implies a growth (IWF) rate of 13.2% for revenue and 16.2% for adjusted EPS. LULU’s projected growth rates are healthier than most of its peers. In contrast, according to Wall Street consensus:

  • Under Armour (UA) is projected to see sales growth of 25.6%, while adjusted EPS is expected to grow 24.7% in 2016.
  • Columbia Sportswear (COLM) is expected to grow its top line by 5.8% and adjusted EPS by 7.4% in 2016.
  • VF Corporation (VFC) is expected to grow sales by 6.7% and adjusted EPS by 8.3% in 2016.

2020 projections

Lululemon Athletica’s management spoke of the company’s longer-term targets and their drivers, providing a strategic update through fiscal 2020. We’ll take a look at that in the next part of the series.

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