Shares of Lululemon hit an all-time high Thursday after it recorded a blowout quarter. The athletic apparel retailer’s North American sales rose 63% year over year in Q2, with international sales up 49%. The company said it is on track to hit 2023 revenue targets two years ahead of projections, by the end of 2021.
Lululemon’s stock was up more than 13% in early trading Thursday, marking a record high of $434.22 in one day.
Like other athletic apparel retailers, Lululemon has been a standout brand in the pandemic, especially as more people take on exercise as a regular hobby. The company also occupies an important niche within women’s activewear.
In its Q2 earnings report, Lululemon highlighted growth in e-commerce, direct-to-consumer sales, international presence, and product innovation. Lululemon plans to debut its inaugural shoe line in the back half of the 2021 and begin selling in early 2022.
E-commerce comps increased 4%, on top of the 157% increase in 2020. E-commerce revenue was $597 million in Q2, or 41% of the total revenue for the quarter. Having already achieved its goal to double its e-commerce business in 2020, Lululemon has consistently soared past competitors in digital growth.
Competitor Nike’s digital sales accounted for 35% of the company’s total business in its most recent earnings for Q4. Nike hopes to make 50% of its business digital by 2025.
“LULU increasingly invests in its digital channel and has managed to seamlessly integrate online and offline,” analysts from Jane Hali & Associates said in a note. “Overall, LULU’s experience (in-store and digital) is excellent. Both channels are integrated, and LULU offers a community feel across the board.”
According to analysts predictions, the brand’s momentum will not die down any time soon. And while Lululemon has faced recent supply chain-related issues and factory shutdowns in Vietnam, executives and analysts remain confident in the retailer’s ability to mitigate the headwinds.
“We have confidence that new product, integrated marketing, and online momentum combined with loyalty, a healthy high-end customer demographic, and athleisure fashion trends will yield traffic, improving conversion, and comps,” wrote Cowen analyst John Kernan in a note. “Our survey indicates a high degree of loyalty and conversion levels should increase as we expect new product to incorporate fashionable versatility.”
On the international front, Lululemon opened eight new stores outside of North America in Q2, with plans to open up to 40 more international stores this year.
The Lululemon-owned Mirror is in 150 stores, with plans to enter 200 shops and launch a new e-commerce site the holiday season and to expand to Canada. The company plans to invest in customer acquisition with Mirror, which offers membership programs and experiences such as digital classes and community events.
“We are playing the long game and have much to unlock in the coming years,” said Lululemon CEO Calvin McDonald in a call with investors.