Lululemon ends year strong as digital sales nearly double; upbeat on Q1

Lululemon Athletica inc. reported a strong fourth quarter with sales and earnings that topped Street estimates.

“Our continued growth demonstrates the strength of lululemon -- before, during and as the pandemic subsides,” stated CEO Calvin McDonald. “We are still in the early innings of our growth, fueled by exciting innovations that create even more opportunity into the future.”

Amid its rapid growth in e-commerce, Lululemon is also pursuing brick-and-mortar expansion. The activewear retailer plans to open between 40 and 50 stores globally in its current fiscal year, with about half of the locations in Mainland China.

“We have a number of guests that only engage with us in our stores and we are focused on reengaging with them,” McDonald said on the company's earnings call.

Lululemon's net revenue increased 24% to $1.7 billion in the quarter ended February 2, beating analysts estimates of $1.66. Revenue rose 21% in North America and 47% internationally. Total comparable sales increased 21%, Lululemon’s direct-to-consumer net revenue increased 94%, and represented 52% of total net revenue, compared to 33% in the year-ago period. 

The company reported net income of $329.8 million, or $2.52 per share, compared with net income of $298 million, or $2.28 per share, in the same period last year. Adjusted earnings per share were $2.58. Analysts had expected earnings of $2.49.

“In response to the COVID-19 pandemic, our teams reacted quickly to ensure we met the evolving needs of our guests,” stated CFO Meghan Frank. “We pulled forward investments in our direct-to-consumer channel, completed our first acquisition, and tightly managed expenses while also supporting our people. These measures contributed to our strong fourth-quarter results, including growing revenue by 24%, and are helping fuel our even stronger top-line growth projections for 2021.”

For 2020 compared to 2019, Lululemon’s net revenue increased 11% to $4.4 billion. Direct-to-consumer net revenue increased 101%. The retailer opened 30 net new company-operated stores during the year, ending with 521 stores.

Lululemon expects first-quarter revenue to be in a range of $1.10 billion to $1.13 billion, higher than what analysts had forecast.