Dive Brief:
- On the back of 60% growth internationally, Lululemon’s first quarter revenue reached $2 billion, an increase of 24% year over year. Comps in the quarter were up 14%, according to a company press release.
- Operating income grew 54% and net income was up 53%, reaching $290 million. The athletics retailer raised its outlook, expecting net revenue to reach between $9.4 and $9.5 billion, up from previous expectations of $9.3 to $9.4 billion.
- Chief Financial Officer Meghan Frank noted that Lululemon’s revenue guidance for the year is ahead of its growth plan, which sees the company reaching more than $12 billion in revenue by 2026.
Dive Insight:
As Lululemon turns 25, the retailer is banking on international expansion to fuel its growth.
International made up just 16% of revenue in 2022, CEO Calvin McDonald said on a call with analysts Thursday, and Lululemon plans to quadruple its international revenue by 2026, as part of its Power of Three x2 strategy. In Q1, the retailer’s international segment as a whole was up 60%, but Greater China alone grew 79%, McDonald said.
The retailer is entering new markets, including Thailand, and will open 30 to 35 international stores this year, mostly in China. Those stores make up the majority of Lululemon’s 50 planned openings for the year.
“[Lululemon] continues to exhibit strong momentum, driven by product innovation, investments in growth/demand creation, and the benefit of not being exposed to the wholesale channel,” Wedbush analysts led by Tom Nikic said in emailed comments.
The retailer saw strength across the board, in terms of both channel and category. Store comps were up 13%, while digital revenue grew 16%, and executives touted double-digit growth in both men’s and women’s products. Notably, Lululemon’s accessories segment surged by 67%.
“I’m thrilled with the strength we continue to see across our assortment,” McDonald said of the accessories business. “While it is the smallest of our three major merchandise categories, it is a growing piece of our business that we fuel with innovation.”
The retailer expanded its nascent footwear category with the launch of the Blissfeel Trail running shoe, and continues to release new golf and tennis styles, as well as more training tops for men. Lululemon also released its first plant-based nylon shirts in the quarter.
Reports arose in April that the retailer could be considering a sale of its Mirror home fitness business. Mirror was not mentioned once on the call, though McDonald did tout the retailer’s new Lululemon Studio app, which lets users watch workout content without a Mirror device.
