Sales Expectations: Why e-Commerce Upside Is Important for LULU



Management guidance for LULU’s sales in fiscal 1Q17 and 2017

In fiscal 2017, Lululemon Athletica (LULU) expects its revenue to grow by 10.9%–13.2% from ~$2.29 billion to ~$2.33 billion. In fiscal 1Q17, LULU expects revenue ranging from $483 million–$488 million, an implied growth rate of 14%–15.2% over fiscal 1Q16.

Same-store sales growth should be in the mid–single digits range in constant-currency terms for both fiscal 1Q17 and fiscal 2017. Lululemon expects to open 44 new stores in fiscal 2017, including 11 stores outside North America. In fiscal 1Q17, eight new stores are scheduled to open.

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What are the vital sales drivers?

Lululemon’s sales growth (IWF) (IWP) upside would likely be provided by its higher store base, as well as the higher demand in key markets. The company also expects e-commerce to post above-average growth. In fiscal 2016, Lululemon’s online sales grew by 25% year-over-year to just over $400 million. Web sales represented 19.5% of Lululemon’s revenue in fiscal 2016, up from 16.5% in fiscal 2014.

LULU’s e-commerce contribution to the revenue pie is considerably higher than most of its competitors in the athletic gear industry. LULU’s 19.5% e-commerce contribution to sales compares to NIKE’s (NKE) 3.9% and Puma’s (PMMAF) (PPRUY) nearly 10% e-commerce contribution to sales. 

That being said, both NIKE and Puma are considerably larger companies. While Nike posted revenue of $30.6 billion last fiscal year, Puma’s sales came in at ~3.4 billion euros in 2015, almost double that of Lululemon.

Wall Street’s expectations for Lululemon Athletica and rivals

Consensus Wall Street analyst estimates project sales of $488 million for Lululemon Athletica (LULU) in fiscal 1Q17, tending toward the high end of the company’s guidance range. For the full year, Wall Street expects LULU to generate top-line growth of 13.3%, with revenue expected to come in at ~$2.3 billion.

Growth expectations for several of LULU’s peers are more muted, as they are much larger companies. VF Corporation (VFC) is expected to post growth of 4.3% in its top line in 2016, while NIKE’s (NKE) sales are expected to grow by 6.1% in fiscal 2016,[1. Fiscal year ended May 31, 2016] according to the Wall Street analyst consensus. Nike declares its fourth quarter and full-year results later in June 2016.


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