Skip to main content

Lululemon strikes familiar growth pose


To drive growth in 2016 Lululemon will again rely on a rapid pace of store expansion and an e-commerce fueled same-store sales increase after that combination enabled the company to achieve record results and surpass annual sales of $2 billion in 2015.

Lululemon dramatically increased its selling space last year, adding 57 new stores to a base of 316 stores to end the year with 363 units. The surge in new store construction is understandable given that Lululemon’s sales per square foot of roughly $1,500 is among the highest in retail.

Lululemon CEO Laurent Potdevin said the company finished the year strong and experienced positive momentum across all channels.

“Our Q4 results are a reflection of our ability to deliver a truly unique experience to our guests, led, as always, by our outstanding store educators,” Potdevin said. “In 2015, we made bold moves across the organization, elevating design and innovation and developing our infrastructure to position us for the future.”

Potdevin did not disclose the size of the company’s 2016 capital budget or how many stores it expects to open. However, the company’s guidance for 2016 same store sales and total sales growth implies that the pace of new store activity could accelerate.

The company expects 2016 full year sales to grow between 10.9% and 13.3% to a range of $2.285 billion to $2.335 billion with same-store sales on a constant currency basis growing in the mid-single digits. That guidance is somewhat conservative compared to the company’s actual performance last year. In 2015, full year same-store sales increased 11% which combined with the addition of 57 new stores allowed Lululemon’s full year sales to increase 14.6% to slightly more than $2 billion.

In the fourth quarter, sales increased 17% to $704.3 million and net income increased 6% to $117.4 million, or 85 cents a share, during the period ended Jan. 31, 2016. Increased expenses put pressure on margins, but Lululemon’s gross margin rate is still a lofty 50.3% of sales compared to 51.5% in the fourth quarter the prior year.

Total company comparable sales, which include direct to consumer sales, surged 11% on a constant currency basis in the fourth quarter and 10% for the year. Strong growth of direct to consumer sales were responsible for nearly all of the increase.

Lululemon’s direct to consumer sales increased 28% during the fourth quarter and now represent 20.8% of the company’s total sales, compared to 19% in the prior year’s fourth quarter.

For the full year, direct to consumer sales grew 25% to $401 million to represent 19.5% of total company revenues compared to 17.9% a year earlier.

This ad will auto-close in 10 seconds