Vancouver-based athleisure giant Lululemon Athletica Inc.’s (Nasdaq:LULU) shares were up almost 17% mid-morning B.C. time on June 1, following news yesterday after hours that the company’s earnings blew past analysts’ estimates.
Driving those gains was impressive sales growth, particularly in e-commerce and outside of its base in North America.
The company that operates 411 stores generated a 141% increase in profit, to US$75.1 million, on US$649.7 million in sales, during the quarter that ended April 29. Earnings per share was US$0.55, compared with analysts' expectation of US$0.46 per share.
Direct-to-consumer, or e-commerce, sales increased 62% in the quarter, compared with the same quarter a year ago. That helped overall comparable sales surge 20% during the quarter, with comparable-store sales up 8%. Overall sales were up 25%.
The company cited “strong growth in Europe,” with new stores opening in Germany and the U.K.
Comparable sales in Asia were up more than 50%, thanks largely to strength in China, but the company also opened its third and fourth stores in Korea and it plans to have an e-commerce site online in Korea later this year.
“Lululemon might be, if it isn’t already, becoming the top brand of its kind in the whole world and that’s an incredible success story with them being from Vancouver – that’s great,” Retail Insider Media CEO and retail analyst Craig Patterson told Business in Vancouver.
“They’re going after Australia’s Lorna Jane, which is doing its expansion. There are a few of them out there.”
Lorna Jane still flies under the radar for many Canadians even though that yogawear company has opened a store in Vancouver’s Gastown neighbourhood as well as one in Toronto. Its website lists stores in 15 other countries.
Lululemon’s international expansion is the company’s second attempt at going global. In its early days it sold franchises in Australia before buying most of those businesses back or closing them. It then focused on its base in North America.
Under Armour is a Lululemon competitor that has struggled of late, according to Patterson. Vancouver’s RYU (TSX-Venture: RYU), which would be a much smaller competitor, saw its quarterly sales and profit each more than double when it reported its most recent earnings in April.
“This successful start to the year reaffirms our strategic priorities and I would like to thank our team for their passion and commitment to connecting with guests around the world,” said Lululemon’s executive chairman, Glenn Murphy, in a release.
The company has yet to reveal how its search for a new CEO is going.
Former CEO Laurent Potdevin abruptly resigned in February.
A U.S. Securities and Exchange Commission filing at the time noted that Potdevin signed a separation agreement with the company that included “a covenant not to sue and a covenant of future cooperation.”
In exchange for that, Lululemon said it would pay Potdevin a lump sum of US$3.35 million, and a series of payments adding up to US$1.65 million over an 18-month period, for an overall total of US$5 million.
Lululemon shares on May 31 were up 6.5% to US$111.53 after hours, after falling 0.55% to close at US$105.05 during the regular session. At around 10:40 a.m. on June 1, the shares were trading at US$122.68.
This story was updated to indicate how shares performed on June 1.