- Still in the early innings of its footwear launch, Lululemon CEO Calvin McDonald said on a call with analysts that the company’s running shoe was so popular in Q1 it drove out of stocks as demand “far exceeded our sales forecast.”
- On top of new golf and tennis categories, Lululemon is launching hike “in the coming weeks” and will begin selling some styles specifically designed for that category. The athletics retailer is also releasing a new fabric in its running category, called SenseKnit.
- Net revenue in the quarter was $1.6 billion, up 32% over last year, while comps surged 28%, according to a company press release. DTC represented 45% of sales, up one percentage point.
In the company’s first quarter since announcing ambitious five-year growth goals, Lululemon saw increases across the board.
Operating income grew 34% to over $260 million, and net income likewise increased more than 30%. That was on top of strong revenue and comps growth. The athletics retailer expects to bring in between $1.75 billion and $1.78 billion in Q2 and between $7.61 billion and $7.71 billion for the year. Lululemon only just surpassed $6 billion in annual revenue. By 2026, the company is planning to make $12.5 billion.
“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 [total addressable market] opportunities in both [North America] and abroad,” analysts for BTIG said in emailed comments. “What’s more, the innovation pipeline remains robust.”
In addition to preparing to enter hike and releasing a new running fabric, Lululemon this week debuted its Restfeel slide, the second shoe in its footwear offering. The company is also planning to bring back some of its most popular products, dubbed Throwbacks, in limited editions.
Asked if he was worried about overloading the consumer with too many new categories, McDonald said the company only launches a few key products in each new category and then complements that assortment with its core merchandise.
“We’re not stepping outside of the relationship we already have with guests,” McDonald said. “We are not stepping outside of how they’re already sweating in our product.”
Interestingly, while Lululemon is arguably the leader of the athleisure movement, McDonald highlighted the performance attributes of its clothing as the “most important factor” and a leader of the retailer’s growth.
“Although used at times for versatility around the house, our gear is designed for activity-based use,” McDonald said, noting that the company saw active lifestyles grow over the course of the pandemic. “I think the core is we are a performance-based athletic brand. We are supporting our guests in their sweat activities and that is driving the momentum and growth of the business during the pandemic and post and continues to be the biggest fuel of our momentum.”