Lululemon earnings beat expectations, shares pop after hours

Athleisure clothing manufacturer saw sales jump 29 per cent year-over-year in the quarter

Lululemon Athletica was founded in Vancouver and maintains its head office here | Glen Korstrom

Vancouver leisure clothing manufacturer and retailer Lululemon Athletica Inc. (Nasdaq:LULU) saw sales and profit soar in the quarter that ended in late July.

The company's revenue soared 29 per cent to US$1.87 billion, while gross profit jumped 25 per cent to US$1.1 billion. 

Lululemon's revenue was about US$100 million higher than analysts had predicted, while its earnings per share worked out to US$2.20, or US$0.34 above expectations. 

The company's share price jumped more than nine per cent after hours. 

Lululemon CEO Calvin McDonald credited the earnings beat to customers liking the company's products, "community activations," and a mix of online and bricks-and-mortar success.

He added that new products have also helped sales. The company added a line of blissfeeel-branded shoes for women in the past year. 

Indeed, the company's growth was global in scope, with sales up 28 per cent in North America, and 35 per cent outside North America. 

Its direct-to-consumer, or online sales represented 42 of total revenue in the quarter – up marginally from being 41 per cent of total revenue in the same quarter in 2021.

Lululemon opened a net total of 21 new company-run stores in the quarter, for a total of exactly 600 stores, according to the company.

A full breakdown of where the company now operates stores was not immediately available, but on Jan. 30, its annual report notes that it operated 574 stores, including 324 in the U.S., 86 in China (including Hong Kong and Taiwan), 63 in Canada and 31 in Australia. 

"It appears that Lululemon is finding itself as being a global brand in terms of its overall sales," Retail Insider owner and retail consultant Craig Patterson told BIV. "It appears that Canada, every year, which is not a surprise, becomes less and less important."

Patterson said the company is building what will be its largest store in Canada, a 12,100-square-foot store on three levels at the corner of Yonge and Bloor streets in Toronto. 

"We've seen Lululemon have some store expansions and relocations over the course of the pandemic, in Canada, into better retail space," he said. •

gkorstrom@biv.com

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