Even in a challenging climate for retailers, Lululemon’s hot streak is showing no signs of letting up.
On Wednesday, the Vancouver, Canada-based athletic chain reported first-quarter earnings of 74 cents per share, topping analysts’ expectations of 71 cents per share and marking the brand’s ninth straight quarter of earnings beats. It credited the strong results to increased traffic to its stores, impressive growth in new markets (most notably China), and robust digital gains.
Same-store sales for the period ended May 5, 2019 were up 14% year-over-year, compared with Wall Street’s forecast of 11%. Revenues increased 20% to $782 million, versus the consensus estimate of $755 million.
At the company’s annual analyst day in April, CEO Calvin McDonald made the surprise announcement that the brand plans to enter the footwear category with a shoe range designed in-house, following the success of its collaboration with sneaker label APL (Athletic Propulsion Labs), which launched in August 2017.
“We tested, and we learned a lot on footwear, and what we learned is: The guest resonates with us selling footwear,” McDonald said at the time. “We believe we’ve identified an opportunity that will be unique to us and unique within the marketplace.”
On a call with investors and analysts, McDonald expressed confidence about the brand’s category expansions, which will also include men’s performance wear, further women’s gear and accessories.
“When we look to building out our core and filling in the assortment opportunities we have around yoga, train and run, as well as OTC [office/travel/commute], we expect that much of that will drive the share of wallet with our existing guests. Because what we’re doing is truly bringing incremental assortment and choice to her and him,” he said.
As part of its five-year growth plan, the company also said it wants to more than double the size of its men’s and online revenues by 2023, as well as quadruple international sales.
Its men’s sales were up 33% during the quarter, and it reiterated its guidance of low-single digit increase in same-store sales for the full fiscal year.
“With what we’re going to be launching in terms of newness, that momentum we believe will continue as we continue to feed the core with with more innovation and test and learn into new categories and build out,” said McDonald.
Lululemon’s shares jumped more than 4% after market close, and have surged more than 40% this year.