Lululemon 4Q16 Earnings Call Notes

Laurent Potdevin – Chief Executive Officer

Slowing sales due to merch issues

“The slowing sales trend early Q1 has most acutely impacted eCommerce. We have clearly identified the issues, an assortment lacking depth and color for spring compounded with visual merchandising that did not powerfully translate our design vision. With focused urgency our teams have been cross correcting the issues, with early indications reflecting an immediate and positive impact on performance. We will see more color in selected style as early as next week.”

Celeste Burgoyne

Co-located and locals

“So as we’ve spoken about with our real estate strategy, co-located and locals, both continue to be something that we see as really exciting opportunities from 2016 and into 2017 in areas we’re focusing really hard on and they both allow us to really capture traffic in the most relevant ways for those communities. Co-located, expanding our square footage, for example, Mall of America and Somerset, two key U.S. co-located stores in 2016, we’ve driven more traffic in those locations and have grown the Men’s business in particular from 50% to 70% through more dedicated square footage. And then locals has also allowed us to go into smaller communities in a really locally relevant way and the results have been something we’re really proud of. Bend, Oregon and Fort Collins also, for example, have been two of the four that we’re really excited about and we’ll continue to really put into that strategy into 2017.”