Lululemon (LULU) CEO Potdevin Talks Turnaround Story with CNBC

Lululemon CEO Laurent Potdevin sat down with CNBC to discuss the company's turnaround and profitability.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Lululemon Athletica (LULU) - Get Report CEO Laurent Potdevin believes the athletic apparel company's turnaround industry beating sales growth is sustainable as long as the company continues to innovate.

CNBC's Sara Eisen spoke with Potdevin in an interview aired on Friday's "Squawk on the Street."

"See as long as we innovate I think it's very sustainable," Potdevin told Eisen. "If you look at the trend, take athleisure out and look at the lifestyle of being athletic and mindful, that trend is going to continue to grow for a long, long time."

Potdevin believes the athleisure bubble will pop eventually and those consumers that do not buy athletic apparel for "the right reasons" will leave.

"The trend of the lifestyle of being athletic will stay, and that's the market that we lead," Potdevin said.

Eisen went on to question the CEO about the scope of improving Lululemon's profitability.

"It's been a huge body of work for the past couple of years, we still have about, you know we're probably 80% of the way through, we've started seeing margin expand and profitability grow so the last two years have been a very strong period of investment," Potdevin added.

The company is focusing on the guest, product innovation and have now begun to see the benefits of its work.

Looking towards the future, don't expect to see Lululemon in the NFL the way some of the company's competitors are anytime soon. But you will see Lululemon growing in different categories.

The company just launched a partnership with Canada's national volleyball teams for men and women. Lululemon is supplying the teams with uniforms for the 2016 Olympic Games in Rio.

Shares of Lululemon are lower by 0.38% to $76.26 on Friday morning.

Separately, TheStreet Ratings has set a "buy" rating and a score of B- on Lululemon stock. This is driven by a number of strengths, which TheStreet Ratings believes should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks it covers.

The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and solid stock price performance. TheStreet Ratings feels its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: LULU

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