Strong direct-to-consumer sales drive 22% revenue rise at Lululemon

By

Robin Driver

Published
Dec 11, 2020

Vancouver-based athleticwear brand Lululemon Athletica Inc. announced net revenue of $1.1 billion for the third quarter on Thursday, up 22% from $916.1 million in the same period in the previous year, as the company’s direct-to-consumer (DTC) sales saw strong growth. On a constant-currency basis, the brand’s revenue increase was 21%.

 
In the third quarter ended November 1, 2020, Lululemon’s revenues increased 19% in North America and an impressive 45% internationally. 
 
Total comparable sales at the company rose 19%, or 18% on a constant-currency basis. Comparable store productivity was 83%, or 82% on a constant-currency basis, representing a decrease of 17% in comparable store sales.

DTC revenues were a real bright spot for the brand, seeing an increase of 94% (93% on a constant-currency basis). DTC revenues accounted for 42.8% of Lululemon’s total net revenue for the quarter, compared to 26.9% in the prior-year period.
 
The company’s quarterly net income totaled $143.6 million, or $1.10 per diluted share, up from $126.0 million, or $0.96 per diluted share, in the third quarter of the previous year.
 
“Our third quarter results demonstrate the strength of Lululemon across channels and markets, both in North America and around the world,” commented Lululemon CEO Calvin McDonald in a release. “Our product innovations, investments in the e-commerce business, and strategic acquisition of Mirror position us well to serve our guests as their needs evolve across both physical and digital experiences.”
 
The company acquired at-home fitness business Mirror for $500 million this summer as part of its efforts to capitalize on the changes taking place in the fitness industry due to the Covid-19 pandemic. The startup sells tech-enabled mirrors allowing customers to participate in live fitness classes from home.
 
Earlier this year, Lululemon saw its sales decline as it was forced to temporarily close its stores in North America, Europe and certain Asian markets, in response to the coronavirus crisis. The company has since reopened almost all of its retail locations and, with demand for fitness apparel and accessories still high, the brand has made savvy investments to press its advantage and accommodate shifts in consumer behavior during the pandemic.
 
Year to date, the company’s revenues totaled $2.7 billion, up 4% from $2.6 million in the same nine-month period in the previous year. Net income was $259.1 million, or $1.98 per diluted share, falling from $347.6 million, or $2.65 per diluted share, a year ago.
 
Due to uncertainty surrounding the ongoing pandemic, Lululemon has not provided financial guidance for Q4. “We have planned the fourth quarter based on multiple performance scenarios and believe we are well positioned for the holiday season,” explained the company’s recently appointed CFO, Meghan Frank.
 
Lululemon currently operates 515 stores around the world.