Lululemon’s 5-Year Plan Begins to Take Hold

The ath-leisure retailer has another successful quarter, with plans to introduce new products and open more stores this summer.

By Kellie Ell on June 12, 2019

Lululemon Athletica Inc. is on a roll.

“There’s been some talk about softness in the apparel space. But there’s no doubt that 2019 is off to a great start for us,” said Calvin McDonald, chief executive officer, on a conference call covering the company’s first-quarter results Wednesday. “We’re beginning to live into our five-year growth strategy.”

The proof is in the results. Net sales for the quarter ending May 5 rose to $782.3 million from $649.7 million a year earlier. That’s an increase of 20 percent. Traffic was up online and in stores during the quarter and comparable sales rose 14 percent.

Lululemon also pushed profits for the quarter to $96.6 million, up from $75.1 million during 2018’s first quarter.

Shares of the company, which closed down 0.4 percent Wednesday to $170.89, are up more than 32 percent year-over-year, and inched upward during after-hours trading.

The Vancouver, Canada-based company revealed its five-year strategic growth plan at an analysts’ day in April. The plan is to expand internationally while doubling revenues in the next five years with new products in both men’s and women’s, and to introduce fresh categories, such as travel and self-care. New self-care products, including dry shampoo and deodorant, will roll out to 50 stores and online next week.

The ath-leisure brand has already begun expanding its men’s wear selection. In May, the Lululemon x Robert Geller collection launched, the company’s first fashion label for men. McDonald also pointed out on the call that the ABC Commuter pants and boxers are some of the most popular items in men’s. Women’s yoga pants and bottoms are some of the most-bought items across the entire company, which is also introducing two high-support sports bras this summer.

Internationally, the brand has previously said it has plans to open between 25 and 30 new stores this year, focusing on Asia and the Middle East. Stuart Haselden, chief operating officer, executive vice president and head of international at Lululemon, told analysts that China continues to hold the most potential for the future, where e-commerce sales increased more than 100 percent during the quarter. The company plans to open between 10 and 15 new stores in China this year, along with another five to 10 in Europe. And in July, Lululemon will open the much-anticipated experiential store in Chicago’s Lincoln Park neighborhood.

McDonald said the Chicago store will “embody the sweat life,” with its yoga studios, meditation space, healthy juice and food for sale and communal gathering spaces for other events.

“The brand is a bright spot in the retail landscape,” read a note from investment research firm Jane Hali & Associates. “The Lulu brand continues to evolve not only across their product, but also as a full lifestyle brand. By doing so, consumers are better able to connect with the brand and become loyal consumers.”

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