Athletic apparel retailer Lululemon said the near-doubling of its direct-to-consumer (D2C) business drove a 24 percent increase in total sales last quarter, and the firm expects growth to continue into 2021 with no signs of the adult activewear market slowing after the pandemic.
In announcing its fourth-quarter results for the three months ending Jan. 31, the Vancouver-based operator of 520 stores told investors it expects at least 25 percent revenue growth this year to $5.5 billion, helped in part by the addition of 40 to 50 new locations.
“Last year was another good reminder of the strength of our core product assortment,” CEO Calvin McDonald told analysts and investors on the company’s earnings call late Tuesday (March 30). “Our continued growth demonstrates the strength of lululemon — before, during and as the pandemic subsides,” McDonald added, saying its yoga, running and workout clothes were still in the early innings of their growth potential.
“People will always want to sweat and stay active, and our focus on innovative performance fabrics will continue to deliver unique solutions,” he said, adding that demand for technical athletic apparel remained extremely relevant, thanks to the company’s ongoing product innovation effort.
After The Stay-At-Home Trend
Although almost all of Lululemon’s stores have now reopened, the company said most are still operating under reduced capacity constraints. To that point, the company quantified its full-year guidance on the expectation that there would not be a significant resurgence in COVID-19 cases and commensurate restrictions.
If the coronavirus situation continues to improve, Lululemon said the same trends that had carried it over the past several years would continue, and also strengthen its competitive position along the way.
“We gained [nearly 1 percent] market share over the course of the fiscal year in the adult activewear market in the U.S.,” McDonald said. “This was our largest annual share gain in recent history and was driven by gains in both men’s and women’s.”
McDonald also said that the fundamental drivers have been the same for the past three years, and that the pandemic has only accelerated their importance, noting that trends that existed before the pandemic were even more important now and projected to grow.
“For example, people wanting to live an active and healthy lifestyle, combined with the growth in demand for technical athletic apparel that performs, and finally, the innate need to feel part of a community and to share a human connection with one another,” McDonald said while outlining the company’s forecast.
2021 Outlook
In addition to store openings, the retailer outlined a range of operational enhancement it plans to implement this year that are designed to keep its increasingly important D2C and digital business growing and improving.
“We will continue to drive conversion by continuing to optimize the guest experience,” he said, “with further enhancements to search, browse, checkout, personalization and payment methods.”
In addition, McDonald said Lululemon would accelerate investment into its rapidly growing international business, expand its omnichannel capabilities, localize payment and delivery options to improve the guest experience and keep scaling buy online, pickup in-store (BOPIS) and curb pickup capabilities, while piloting same-day delivery from our stores in nine key markets.
“Our brand is perfectly positioned to help our guests live into the sweat-life any way they choose,” McDonald said, noting Lululemon’s mix of technicality, comfort, versatility and style. “Our pipeline of innovation for the coming year is robust, and we’re already off to a strong start.”
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More