Apparel retailer Lululemon Athletica Inc. reported strong sales gains online and in stores in the fiscal third quarter ended Oct. 30.
Online sales increased 16.5% to $104.0 million in the quarter from $89.3 million a year ago. Store sales posted an 11.3% gain to $393.5 million from $353.4 million in fiscal Q3 2015. Lululemon also generated $46.9 million in revenue from its “other” segment, which primarily is from sales at its outlet stores, during the quarter.
Revenue from Lululemon’s online channel accounted for 19.1% of total revenue of $544.4 million in fiscal Q3 compared with 18.6% of $479.7 million in total revenue in the year-ago quarter, the retailer said. Lululemon is No. 96 in the Internet Retailer 2016 Top 500 Guide.
For the first nine months of fiscal 2016, online sales grew 13.2% to $289.0 million from $255.2 million in the same period of fiscal 2015.
The fourth quarter started slowly, chief financial officer Stuart Haselden told analysts on the earnings call Wednesday, but the retailer rebounded in the week leading into Thanksgiving and Black Friday weekend, with Cyber Monday being particularly strong and that momentum continuing into December.
“We continue to be on track with our five-year plan of doubling our revenue and more than doubling our earnings as we continue to execute against our long-term growth strategies ranging from product innovation, expanding our international footprint, building our $1 billion men’s category and connecting our global collective to our digital ecosystem,” CEO Laurent Potdevin told analysts on the call, according to a Seeking Alpha transcript.
“We continue to leverage our [customer relationship management] engine to drive digital marketing campaigns, local store activities and events with deeper segmentation and knowledge of our guests, further enhancing our guest loyalty and experience,” he said. “By using a channel-agnostic model, digital continues to boost the success of all of our channels. In Q3, we launched store inventory lookup on our mobile app and websites, allowing our guest to see what inventory is in our stores, as well as the ability to ship from stores.”
Haselden said more than 80 Lululemon stores participate in its ship-from-store program. The retailer “saw continued success in expanding our ship-from-store program that reflects the evolution of our omnichannel model,” he said. “Specifically, we were able to leverage the clearance section of our website to move slower-selling styles in over 80 of our stores at a superior margin than we would have otherwise.”
Lululemon also completed its website redesign with the launch of sites in the Europe, Middle East and Africa and in the Asia Pacific, Potdevin said on the call. The retailer is ramping up its China expansion, especially in Shanghai and Beijing. “This month, we will be opening our first three stores in China,” Potdevin said. “These openings are happening on the heels of our performance on Alibaba Singles’ Day on Nov. 11, the world’s largest online shopping day. Our Tmall site greatly exceeded our expectations, generating over 10,000 orders in one day.”
The retailer, which redesigned its yoga pants a year ago and says it has had strong sales all year with that product, will introduce “a fantastic innovation in the bra category in 2017,” Potdevin said, though he declined to give details.
Potdevin also announced several promotions and hires:
- Celeste Burgoyne is promoted to executive vice president Americas retail from senior vice president of the Americas. She has been with Lululemon since 2006.
- Sun Choe joins as senior vice president of global merchandising and was most recently chief global product merchant at Marc Jacobs.
- Garrett Pope will start at the end of January, based in London, as general manager for the Europe, Middle East and Africa region. He most recently held the same title at Converse.
- Greg Harvey, based in Vancouver, fills the new role of senior vice president global store design and development. He most recently worked at Tesla Motors.
For the third quarter ended Oct. 30, Lululemon also reported:
- Online sales of $104.0 million, up 16.5% from $89.3 million in the year-ago period.
- Company-operated store sales of $393.5 million, up 11.3% from $353.4 million.
- Other sales, primarily from outlet stores, of $46.9 million, up 26.8% from $37.0 million.
- Net revenue of $544.4 million, up 13.5% from $479.7 million in the year-ago quarter.
- Net income of $68.3 million, up 28.4% from $53.2 million.
- A total comparable sales gain, including e-commerce, of 7%.
For the first nine months of fiscal 2016, Lululemon reported:
- Online sales of $289.0 million, up 13.2% from $255.2 million in the year-ago period.
- Company-operated store sales of $1.134 billion, up 12.6% from $1.007 billion.
- Other sales, primarily from outlet stores, of $131.9 million, up 40.6% from $93.8 million.
- Net revenue of $1.554 billion, up 14.6% from $1.356 billion.
- Net income of $167.3 million, up 12.6% from $148.6 million.
- A total comparable sales gain, including e-commerce, of 6%.