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06/02/2022

Lululemon’s momentum shows no signs of stopping

Marianne Wilson
Editor-in-Chief
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Lululemon’s first-quarter net revenue increased 32% to $1.6 billion.

Lululemon posted another strong quarter as it successfully navigated the ongoing impacts of COVID-19, supply chain disruptions and inflationary pressures.

The athletic apparel retailer also boosted its full-year outlook and said it expects the momentum in its business to continue despite broader economic headwinds.

“With another strong quarterly performance, seemingly bypassing any hint of macro pressures, Lululemon is exhibiting exceptional execution, boosted by its exposure to a higher-earning consumer and the vast TAM (total addressable market) opportunities in both NA and abroad,"  said Camilo Lyon, lifestyle and wellness analyst, BTIG. "We believe Lululemon is among the few companies that entered the COVID-19 pandemic from a position of strength and, as such, will exit it stronger."

Lululemon reported net income of $190 million, or $1.48 per share, in the quarter ended, compared with net income of $145 million, or $1.11 a share, in the year-ago period. Adjusted earnings were $1.16 a share.

Net revenue increased 32% to $1.6 billion. Direct-to-consumer net revenue increased 32% and represented 45% of total net revenue.

Total comparable sales increased 28%. Total comparable sales increased 28%.

"In the first quarter of 2022, continued momentum in the business enabled us to achieve a strong start to the year,” stated CEO Calvin McDonald. “I want to thank our teams around the world for remaining agile and continuing to execute at a high level to achieve our goals, while successfully navigating the challenges within the macro environment.”

Lululemon has been expanding into new categories, including footwear. It's also looking at growth in some other sports categories, and has rolled out its first-ever collection designed for golf. The company plans to launch hiking products “in the coming weeks."

“Our product pipeline remains very strong and it’s the bedrock of the business,” McDonald told analysts on the company’s earnings call.

In April, Lululemon said it was taking its pilot trade-in and resale program nationwide as part of its sustainability commitment and as the nation grapples with rising prices.

Lululemon now expects fiscal 2022 sales in a range of $7.61 billion to $7.71 billion, up from its prior forecast of $7.49 billion to $7.62 billion. It expects adjusted earnings of $9.35 to $9.50 per share.

“Our teams continue to deliver strong financial performance while navigating the ongoing impacts of COVID-19, supply chain disruptions and inflationary pressures,” said CFO Meghan Frank. “While we are not immune to these challenges, our omni operating model, balanced growth strategy, and unique approach toward innovation enable the positive results we are reporting today and anticipate for the full year."

The company opened five net new company-operated stores during the first quarter, ending with 579 stores.