Vancouver-based athleticwear brand Lululemon Athletica Inc. has reported impressive financial performance in the third quarter, with net revenue reaching $1.1 billion. This represents a significant 22% increase from the previous year, driven by the company’s direct-to-consumer (DTC) sales. Even when adjusted for currency fluctuations, the revenue increase was still substantial at 21%.

Lululemon’s success was seen both in North America, where it experienced a 19% revenue growth, and internationally, where it saw a remarkable 45% increase. Comparable sales also rose by 19%, or 18% in constant-currency terms. However, the company did face a 17% decrease in comparable store sales, indicating a clear shift in consumer preference towards DTC sales.

The standout contributor to Lululemon’s revenue growth was its DTC channel, which witnessed a remarkable 94% increase in revenues. This channel accounted for 42.8% of the company’s total net revenue for the quarter, compared to 26.9% during the same period last year.

Lululemon’s net income for the third quarter amounted to $143.6 million, or $1.10 per diluted share, showing positive growth from $126.0 million, or $0.96 per diluted share, in the previous year.

CEO Calvin McDonald expressed his satisfaction with the results, emphasizing the strong performance across different channels and markets. McDonald also highlighted Lululemon’s product innovations, investments in e-commerce, and the strategic acquisition of Mirror, a home fitness business. The company purchased Mirror for $500 million earlier this year, recognizing the growing demand for at-home fitness solutions due to the COVID-19 pandemic. Mirror offers tech-enabled mirrors that enable customers to participate in live fitness classes from the comfort of their own homes.

While Lululemon faced challenges earlier in the year with the temporary closure of its stores, the majority of its retail locations have since reopened and there has been a sustained demand for fitness apparel and accessories. The company has made strategic investments to adapt to changing consumer behaviors.

For the year so far, Lululemon’s revenues have reached $2.7 billion, a 4% increase from the previous year. However, net income has fallen to $259.1 million, or $1.98 per diluted share, compared to $347.6 million, or $2.65 per diluted share, in the previous year.

Due to the ongoing uncertainty caused by the pandemic, Lululemon has refrained from providing financial guidance for the fourth quarter. However, the company’s CFO, Meghan Frank, expressed confidence in their preparation for the holiday season, stating that the fourth quarter has been planned based on various performance scenarios.

With 515 worldwide stores and a strong performance in DTC sales, Lululemon is well-positioned to continue thriving in the athleticwear market.

Useful links:
Lululemon Athletica Inc.
Mirror