Hot home workout wear stretches Q3 revenue by 22% for Lululemon
Lululemon Athletica Inc beat quarterly revenue estimates on Thursday, as customers spent more on yoga pants and athleisure apparel for home workouts during the COVID-19 pandemic.
Robust demand for home workout wear has been the driving force behind the company's growth as consumers prefer socially distant workouts due to the pandemic.
The company has also been ramping up marketing spending on Mirror, acquired earlier this year for US$500 million, to capitalize on booming demand for online workout classes.
The New York-based startup makes US$1,500 mirror-like video monitors and offers monthly subscriptions for live workout classes.
Net revenue rose 22 per cent to US$1.12 billion in the third quarter ended Nov. 1, beating analysts' average estimate of US$1.02 billion, according to IBES data from Refinitiv.
The company reported a net income of US$143.6 million, or US$1.10 per share, in the third quarter, compared with US$126 million, or 96 cents per share, a year earlier.
In North America, net revenue grew 19 per cent, boosted by its e-commerce business. Overall direct to consumer revenue increased 94 per cent, the company said, representing 42.8 per cent of total revenue compared with 26.9 per cent a year ago. This represents the sales that Lululemon makes straight to consumers, using its stores and website, without any middlemen.
Due to the uncertainty around the COVID pandemic, which has forced it to shut a handful of its stores temporarily again, Lululemon is not offering a full outlook for 2020.
Like others in retail, Lululemon faces the threat of additional store closures, with coronavirus cases still surging in the United States and in other parts of the world.
As of Thursday's market close, Lululemon shares had run up more than 59 per cent this year, bringing the company's market cap to US$48.1 billion.