Lululemon (LULU) Poised to maintain Momentum

Lululemon (LULU) Poised to maintain Momentum

Lululemon Athletica Inc. (LULU), which reported its earnings last week for the third quarter, launched this year’s retail sales headline and is poised for strong 2021 growth. Internationally, expanding its physical stores, digital acceleration, and strong e-commerce. revenue from widespread adoption of the work-from-home lifestyle and more casual dress code has contributed to the company’s performance this year. Going forward, analysts expect the lifestyle company to continue to perform well compared to growing competition in a challenging sales environment.

Lululemon reported revenue of $ 1.12 billion, beating analysts’ expectations. The company’s sales in the third quarter equated to a 22% increase from a year ago.

“As we look to next year, we are seeing LULU benefit from reopening its retail stores and many of them were effectively closed for half of 2020 as well as from tails ongoing worlds both in segment (athletics) and channel (digital), as they prepping for the expansion of segments (shoes coming in 2023) on which LULU is well positioned to optimize “said Camilo Lyon, a BTIG Research analyst.

Currently, 97% of Lululemon’s stores are open worldwide, according to the Director’s estimates. And e-commerce contributed about $ 554 million, or 61% of total revenue, according to Meghan Frank, Lululemon’s chief financial officer.

“Our product innovations, investments in the e-commerce industry, and the strategic building of MIRROR are well placed to serve our guests as their needs evolve across the board. both physical and digital experiences, “said Chief Calvin McDonald.

Originally known specifically for his yoga offerings, Lululemon has expanded in recent years to position itself in a “lifestyle-inspired athletic apparel company” with a product line that including “yoga, running, training, and most other sweaty hobbies.” This year, the company has shown resilience and still plans to “open 30 to 35 new stores while also accelerating our quarterly store strategy,” according to the Director.

Lululemon has also invested in digital acceleration. “We’ve enabled virtual waiting lists, so guests don’t have to wait anymore and instead can be contacted by text when it comes into the store,” McDonald said on the job call . ”We continue to offer our digital educators and concierge virtualization programs, and guests both welcome the initiatives. This innovation reflects our consistent ability to be flexible and anticipate the changing needs of our guests. ”

Analysts were also excited about the MIRROR purchase, which Lululemon bought for $ 500 million earlier this year. Chief Lululemon described the purchase as “lightweight integration,” estimating that MIRROR would generate “more than $ 150 million in revenue for the full year 2020,” which is an increase from the earlier estimate. of $ 100 million.

Lululemon distributes MIRROR in just 10 to 15 stores this year and offers it on its website. “We made the strategic decision to increase marketing spend for MIRROR in the second half to take advantage of current trends towards home consumption and seize the opportunity to lead a business through the season holidays and into next year, “Frank said.

Uncertain sales environment, consumer spending, and competition against companies like Peloton Interactive, Inc. will continue. (PTON) by revealing threats for Lululemon through 2021. However, after leading a challenging year through the pandemic, Lululemon appears optimistic about its long – term growth.

“We are definitely going to come out of the year ahead of where we thought we would be in the five-year dollar vision plan, and we will continue to invest in it as we looking ahead to the ’23 plan and then obviously, our design beyond that, prioritizing the investments, “McDonald said of the employment call.” Central to our ecosystem strategy and an omni approach and digital plays a big part of that. We’re going to invest in making sure we support the growth of the business and take a long-term view. ”