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Why Lululemon Has Room to Run

When a stock has had the runLululemonhas had — up some 40 percent so far this year — it is worth questioning how much further up it can go.

Credit Suisse analyst Christian Buss expects the trend to continue. Buss upgraded Lululemon shares to outperform from neutral Wednesday, citing increasing confidence in the athletic apparel retailer’s ability to sustain its double-digit same-store sales growth.

Buss’s opinion was based on case studies of Lululemon stores in more established markets as well as a study of its ecommerce site.

In an interview with CNBC Wednesday, Lululemon CEO Christine Day also tackled the question, and outlined several ways the company plans to continue its growth. (To hear the full interview, watch the video.) » Read More

“I think our job is to just keep growing and doing it the way we’re doing,” Day said.

Day cited the enthusiasm of Lululemon’s customers and its brand ambassadors, which are local yoga and spin instructors and trainers that endorse the brand, for creating a loyal fan base.

“Our guest experience in the stores is one of the most critical aspects,” she said. “It’s our secret weapon.”

That said, the company also is trying several new things. The retailer plans to open another showroom in Hong Kong, add a showroom in London, and is using a website with localized pages to promote e-commerce sales.

Apparel for men also is a growing part of the business that now accounts for about 15 percent of sales. Last year the company launched a line for younger girls called Ivivva Athletica, that focuses on apparel for dance, gymnastics and skating.

Still, Buss’s upgrade also rests heavily on the determination that double-digit same-store sales gains are sustainable even its mature markets.

Questions? Comments? Email us at consumernation@cnbc.com. Follow Christina Cheddar Berk on Twitter @ccheddarberk.

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