Lululemon beats Street with Q3 earnings, sales

Lululemon Athletica Inc. topped analyst expectations for growth in net revenue and sales during a strong third quarter of fiscal 2020.

The yoga and workout wear retailer reported adjusted earnings per share of $1.16, compared to projections of $0.88 per share. Net revenue increased 22% to $1.1 billion from $916 million and ahead of an expected $1.02 billion. This included net revenue growth of 19% in North America and 45% internationally. 

Direct-to-consumer net revenue growth of 94% helped drive overall sales performance. Direct-to-consumer net revenue represented 42.8% of total net revenue, compared to 26.9% for the third quarter of fiscal 2019.

In addition, net income rose 14% year-over-year to $143.64 million, from $125.98 million. Total same-store sales increased 19%. The company opened nine net new company-operated stores during the quarter, ending with 515 stores.

"Our third-quarter results demonstrate the strength of Lululemon across channels and markets, both in North America and around the world,” said Calvin McDonald, CEO, Lululemon. 

"Our performance this quarter was driven by strong omni-momentum, with notable strength in conversion and increased traffic to our e-commerce sites,” said Meghan Frank, CFO, Lululemon. "We have planned the fourth quarter based on multiple performance scenarios and believe we are well-positioned for the holiday season."

As a result of the COVID-19 pandemic, all of the company's retail locations in North America, Europe, and certain countries in the Asia Pacific were temporarily closed during the first quarter of fiscal 2020. The company began reopening its retail locations in these markets during the second quarter of fiscal 2020 and almost all locations were open during the third quarter of fiscal 2020. Subsequent to November 1, 2020, while almost all of Lululemon’s retail locations have remained open, it has experienced some temporary closures and is currently operating with tighter capacity restrictions in certain markets.

Due to the continued impact that COVID-19 is having across the globe, Lululemon is not providing detailed financial guidance for fiscal 2020 at this time.