Lululemon evolution reaps strong results
Lululemon Athletica Inc.’s ongoing evolution — its push into men’s wear, work wear, underwear and self-care — along with investments in e-commerce, product innovation and global expansion, led to one of its “strongest years ever,” the Vancouver-based retailer said Wednesday.
The company said net revenue for the fourth quarter, aided by strong holiday sales, hit US$1.2 billion, a 26-per-cent increase compared to the previous year. Total revenue for fiscal 2018 was US$3.3 billion — not far off its goal of US$4 billion in revenue by 2020.
The company reported net income of US$218.47 million for the fourth quarter ended Feb. 3, up 82 per cent from $119.76 million in the same quarter the previous year. The retailer says earnings per share amounted to $1.85, up from $1.33 in the fourth quarter of the previous year.
Analysts surveyed by Thomson Reuters Eikon expected earnings per share of $1.74.
The company achieved three other goals for 2020 in 2018, including reaching an e-commerce penetration rate of 26 per cent.
Lululemon also announced that it is opening e-commerce markets in France, Japan and Germany and plans to roll out its “order online, pick up in store” program across the U.S. by the winter holidays this year.
Globally, Lululemon signalled plans to open 25 to 30 stores outside North America. Lululemon’s stock price has roughly doubled in the last year, from US$78.71 on March 27, 2018, closing at US$146.80 on Wednesday before reaching more than US$160 in aftermarket trading as the company gave its earnings update.
In recent months, analysts have seemed particularly curious about the company’s budding loyalty program, with one suggesting Wednesday that the program could act as a springboard into to the “lucrative” world of personal experiences, such as yoga and wellness retreats.
“This is them laying the groundwork, I think, for that kind of move,” said Neil Saunders, managing director and retail analyst at Globaldata Retail.
Lululemon first began testing the loyalty program in Edmonton, chief executive Calvin Mcdonald said in December. In that pilot program, members paid an annual fee of $128 in exchange for a free pair of shorts or pants, access to in-store classes and “curated events” as well as free “expedited shipping” on online orders. On Wednesday, Mcdonald released more details about the tests on the program, including an increase in pricing. Lululemon is now testing the program in Denver, at an annual fee of US$148, and receiving “wonderful take-up.”
“It sort of confirmed our thinking, which is: There’s real value in the membership,” Mcdonald told analysts on a conference call Wednesday. “Our intent over the coming months is to select a few more markets and keep testing.”