Here’s What to Expect When Lululemon Reports Q2 Earnings This Week

Lululemon Athletica Inc. will report earnings for the second quarter on Sept. 8 after markets close.

The activewear and athleisure company has been a standout brand in the pandemic, especially as more people take on exercise as a regular hobby. According to early estimates from analysts at Zacks Investment Research, Lululemon will report earnings per share of $1.2 in Q2, up 60% from last year at $0.74. This would mean an overall year-over-year sales growth of about 50% to $1.34 billion.

Lululemon’s performance in recent quarters has been bolstered by multiple factors. In addition to occupying an important niche within women’s activewear, Lululemon has also expanded its resale arm via a partnership with circular shopping firm Trove and has maintained a strong direct-to-consumer business.

According to Matt Powell, the senior sports industry adviser for The NPD Group Inc., activewear has consistently outperformed fashion categories in the pandemic, making it the “key apparel story in 2021.” Activewear brands that cater to the historically underserved women’s market, such as Lululemon and Sweaty Betty, have seen the most growth.

“The top performing active brands are the ones focused primarily on women,” Powell told Footwear News in August. “At current trajectories LULU will pass Nike as the largest women’s active brand in the US.”

When it comes to digital growth, an important area of focus for Nike, Lululemon has already demonstrated strong results. The company posted an 55% hike in e-commerce revenue year-over-year in Q1. In total, e-commerce accounted for 44.4% of Lululemon’s total revenue for the first quarter. Comparatively, Nike’s digital sales accounted for just 35% of the company’s total business in its most recent earnings for Q4. And while Nike hopes to make 50% of its business digital by 2025, the sportswear giant still trails behind Lululemon in this crucial area.

Lululemon will also likely have more to share about its “Lululemon Like New” resale program that it launched in May. The recommerce initiative, powered by Trove, has already launched in California and Texas in an effort to reduce textile waste and reach new consumers at a lower price point.

Meanwhile, opportunities for athlete sponsorship deals have pushed Lululemon to sign more elite athletes, especially as some female athletes pull out of deals with legacy brands like Nike. Olympic steeplechaser Colleen Quigley is now sponsored by Lululemon after she left Nike earlier this year.

International expansion has also been an important an important area of focus for the brand and will likely be highlighted in Q2 earnings this week. In a Q1 call with investors, Lululemon CEO and director Calvin McDonald said the brand is still in the early stages of its international growth, but current trends indicate positive results to come.

“I can see a time in the near future where our international business grows in size to be equal to our North America business,” McDonald said.

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