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Why Solid Comps Growth Drove Lululemon’s 2Q17 Top Line

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Analyzing Lululemon’s 2Q17 top line

As we discussed in this series, Lululemon Athletica (LULU) reported its second-quarter results on August 31. The company recorded a 12.9% YoY (year-over-year) increase in its top line to $581 million. It beat Wall Street expectations of a 10% rise in sales to $568 million and management’s guidance range of $565–$570 in total sales. The company outperformed Wall Street and management’s guidance in the first quarter as well.

“The strategic pillars, including digital, international, men’s, and North America drove the improvement in our business,” said Laurent Potdevin, CEO of Lululemon Athletica.

Competitor Under Armour (UAA), which reported its second-quarter results on August 1, also posted better-than-expected results. Its top line rose 8.7% to $1.1 billion, beating the consensus by $11 million.

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What drove Lululemon’s 2Q17 sales?

LULU’s top-line growth was driven by 2% growth in comp store sales, 30% growth in e-commerce comps, and an 11% increase in square footage.

Overall sales comps were up 7%, outdoing consensus expectations of a 4% increase. Comps performance is particularly impressive compared to the 1% decline in the first quarter.

“Comp results were strong across channel and merchandise category,” said Potdevin,

The company opened 42 net new stores over the last year, including 24 stores in the United States, four in Canada, nine in Asia, and four in Europe.

Foreign currency negatively impacted the top line by $1.5 million or 0.3%.

ETF investors seeking to add exposure to Lululemon Athletica can consider the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.37% of its portfolio in LULU.

Read on to the next part of this series to learn about LULU’s bottom-line performance.

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