Lu­l­ule­mon Con­tin­ues To Grow With Global Shop­pers, Men’s Wear

The ath-leisure com­pany beat third-quar­ter earn­ings es­ti­mates on both top and bot­tom lines.

WWD Digital Daily - - The Reviews - BY KELLIE ELL

Lu­l­ule­mon Ath­let­ica is still per­form­ing. And men and in­ter­na­tional shop­pers are just start­ing to get into the game.

The 20-year-old Cana­dian sports ap­parel and ac­ces­sories maker, which be­gan as a yoga com­pany for women, has mor­phed into a bil­lion-dol­lar ath-leisure and ath­letic em­pire for both men and women.

Com­pany shares have nearly dou­bled year-to-date and Lu­l­ule­mon has set a rev­enue tar­get of $4 bil­lion by 2020. But some an­a­lysts think the com­pany will reach its goal sooner.

“At this point, they are the pre­mium price point win­ner in this ath-leisure seg­ment,” said John Ker­nan, manag­ing di­rec­tor at Cowen. “It's be­ing worn for per­for­mance, for ca­sual, for fash­ion. It checks all the boxes.”

The com­pany re­leased earn­ings Thurs­day af­ter the mar­ket closed beat­ing ex­pec­ta­tions on both top and bot­tom lines.

Sales in­creased 21 per­cent dur­ing the quar­ter to $747.7 mil­lion, up from $619 mil­lion in 2017's third quar­ter. Mean­while, in­come was also up from $85.6 mil­lion last year to $135.9 mil­lion dur­ing 2018's third quar­ter.

“There is noth­ing but op­por­tu­nity,” Lu­l­ule­mon chief ex­ec­u­tive of­fi­cer Calvin McDon­ald said on Thurs­day's con­fer­ence call. “We don't need to cre­ate it, we just need to be part of it.”

Not sur­pris­ingly, Lu­l­ule­mon was one of the big win­ners dur­ing this year's Black Fri­day, the start of the hol­i­day shop­ping sea­son, in terms of traf­fic and de­mand.

And while Lulu still has what Ker­nan de­scribed as a “fever­ishly loyal” fan­base among women in North Amer­ica, men and in­ter­na­tional shop­pers are ma­jor growth driv­ers.

“It's an im­por­tant part of the long-term story,” Ker­nan said and pointed out that about half of the phys­i­cal store growth is hap­pen­ing out­side of North Amer­ica, in places like Asia and Europe.

In fact, since 2017's third quar­ter, Lulu has opened 20 brick-and-mor­tar stores out­side of North Amer­ica: 11 in Asia, seven in Europe and one each in Aus­tralia and New Zealand.

In China, “all the ba­sis of what drove our busi­ness in North Amer­ica is hap­pen­ing and ac­cel­er­at­ing,” McDon­ald said.

Stu­art Haselden, Lu­l­ule­mon's chief op­er­at­ing of­fi­cer, added that Lulu opened its first lo­cal mar­ket e-com­merce site and first store in Osaka, Ja­pan.

“All good signs of what the fu­ture holds for us across Asia,” he said.

Lu­l­ule­mon re­mains a lux­ury price point in the ath-leisure trend, charg­ing more than $100 for a pair of pants.

In ad­di­tion to new stores, ex­ec­u­tives cred­ited the com­pany's ap­peal to its prod­uct as­sort­ment. The Like Noth­ing bra — an anti-ex­er­cis­ing bra re­leased ear­lier this year — was a fan fa­vorite.

And while women con­tinue to make up about 80 per­cent of sales, ac­cord­ing to Rox­anne Meyer, manag­ing di­rec­tor and se­nior re­tail an­a­lyst at MKM Part­ners, more men than ever are buy­ing Lulu.

The ABC Pant, Com­muter Pant and the Jog­ger pant, were some of men's fa­vorites, ac­cord­ing to Haselden.

“Men's [ap­parel] con­tin­ues to be an ex­cit­ing growth story for us,” he said.

The com­pany's abil­ity to com­bine “qual­ity and tech­ni­cal specs and fash­ion all in one makes Lulu in­creas­ingly feel like a value, not the brand that you're pay­ing up for,” Meyer said. “And that's how they're win­ning.”

Lu­l­ule­mon has set a rev­enue tar­get of $4 bil­lion by 2020.

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