Athleisure’s demise exaggerated as Lululemon sales surge
Retailer posts 13.7% jump in third quarter
• A strong thirdquarter performance at Lululemon Athletica Inc. should dispel industry fears that the athleisure apparel trend is dead.
The Vancouver- based yogawear and athletic brand posted a 13.7- per- cent sales increase in the period ended Oct. 29 to $ 619 million, while earnings exceeded analyst estimates.
Total comparable sales were up eight per cent in the quarter, while online revenue climbed 26 per cent.
“Online we saw significant acceleration this quar- ter,” chief executive Laurent Potdevin told analysts in a conference call after markets closed on Wednesday.
Momentum is strong heading in to the fourth quarter, he noted, with the retailer hitting its highest revenue day of all time on Black Friday last month and highest online revenue day three days later on Cyber Monday.
Lululemon, which has 388 stores in North America and is expanding into Asia, said market growth in China was up 450 per cent in the period. A visit to China, where the retailer is opening 12 stores this year, provided a glimpse at the future of retail, Potdevin said.
“Digital is so intrinsically woven into every experience, seamlessly moving f rom online to offline,” he said, adding current customer behaviour suggests that e-com- merce could account for 40 to 50 per cent of its business in China eventually.
Earnings per share were $ 59 million, or 43 cents per share, compared with earnings of $68 million (50 cents) in the same period of last year, due a decision to close the retailer’s Ivivva stores in June.
The restructuring shifted sales of the athletic childrenswear line to mostly online, closing 40 of the company’s 55 Ivivva stores and converting half of the remaining outlets to Lululemon stores. That move resulted in pre- tax restructuring costs of $22.2 million in the third quarter of fiscal 2017, while the company said Wednesday that total pre-tax restructuring costs in 2017 related to Ivivva will be in the range of $ 45 million to $ 50 million, below an earlier forecast of $ 50 million to $60 million. Excluding the Ivivva costs, adjusted earnings were 56 cents compared with 47 cents in 2016, ahead of analyst mean estimates of 52 cents.
Lululemon’s shares were up six per cent in aftermarket trading on Wednesday after the announcement. The stock has risen about 30 per cent since June.