Lululemon Doubles E-commerce Business, But Plans to Open 40 to 50 Stores This Year
CEO Calvin McDonald doesn’t see the Sweatlife slowing down anytime soon. A Lululemon brick-and-mortar location. Lululemon Athletica continues to benefit from the activewear boom and prolonged emphasis on comfort as consumers work from home. The Vancouver, British Columbia-based athletic apparel and accessories firm revealed fourth-quarter and full-year earnings Tuesday after the market closed, improving on top-line revenues and logging a $588 million profit for the year. “I’m proud of how we navigated this past year and delivered for our employees, guests and shareholders,” Calvin McDonald, the firm’s chief executive officer, said in a statement. “Our continued growth demonstrates the strength of Lululemon — before, during and as the pandemic subsides. We are still in the early innings of our growth, fueled by exciting innovations that create even more opportunity into the future. All of us on the leadership team have so much gratitude for our teams and their agility during these unprecedented times.” For the three-month period ended Jan. 31, total company revenues increased 24 percent to $1.7 billion, up from nearly $1.4 billion the same time last year. Net revenues rose 24 percent in North America and 47 percent internationally. Total comparable sales increased 21 percent during the quarter, year-over-year, while direct-to-consumer net revenues surged 94 percent during the same period. The company made nearly $330 million during the quarter as a result, compared with $298 million the same time last year. For the year, total revenues increased 11 percent to $4.4 billion, up from $3.9 billion the same time last year. Direct-to-consumer net revenues were up 101 percent for the year, while net revenues increased 8 percent in North America and 31 percent internationally, year-over-year. Meanwhile, headwinds persisted in stores, many of which were closed part of the year. Company-operated store net revenues fell 34 percent for the year. Operating margins also decreased for the quarter — 330 basis points — to 26.5 percent. Still, the company logged $588 million for all of 2020, slightly less than the $645 million the year before. The company generated $170 million in revenues (beating its $150 million estimates) during the year from Mirror, the at-home fitness system it purchased in June 2020 for $500 million.
Lululemon ended 2020 with $1.2 billion in cash and cash equivalents. The retailer now expects net revenue to be in the range of $1.1 billion to $1.13 billion for the current quarter, with diluted earnings per share in the range of $0.81 to $0.85. For the year, the company anticipates net revenues will be in the range of $5.55 billion to $5.65 billion, with diluted earnings per share in the range of $6.10 to $6.25 for the year. “The trends that existed before the pandemic are only more important now and will only continue after the pandemic,” McDonald told analysts on Tuesday afternoon’s conference call. “People will always want to sweat and stay active.” Lululemon more than doubled its e-commerce business during the pandemic. But it still plans to pursue brick-and-mortar stores, opening between 40 and 50 locations globally in fiscal year 2021. McDonald said roughly 15 to 20 of those stores will be in Mainland China, a major growth opportunity for the company, despite the current political storm in the region over Xinjiang cotton. “China is equal to those [other] opportunities for us to invest in. We keep investing in that market,” McDonald said. “I’m excited about our international business in all markets. “We have a number of guests that only engage with us in our stores and we are focused on reengaging with them,” he added. Company shares, which closed up 0.29 percent to $317.09 on Tuesday, are up more than 67 percent, year-over-year.