Lululemon Athletica Inc. increased its direct-to-consumer revenue, which is mostly ecommerce, by 32.8% year over year during its first fiscal quarter ending May 5. The direct segment generated 26.8% of total revenue or $209.7 million, up from 24.3%, or $157.9 million, in the same period last year. Lululemon Athletica Inc. is No. 81 in the Internet Retailer 2019 Top 1000.
The retailer expanded its omnichannel capabilities during the quarter, as it now offers buy online pick up in store (BOPIS) at 150 locations, up from 35 locations at the end of the previous quarter, according to CEO Calvin McDonald in a call with investors transcribed by Seeking Alpha. The plan is to expand it to all of its 455 stores by the end of the third quarter. He said 80% of BOPIS orders are available for pick up within an hour.
Lululemon is revamping stores beyond adding BOPIS, with a 20,000-square-foot experiential store opening in Chicago during the upcoming quarter, according to McDonald. The store will offer meditation spaces, workout studios, healthy food services and community gathering areas to draw in shoppers, serving as a test bed for potential improvements at other stores in the future. Overall revenue for the quarter was up 20.4% to $782.3 million from $649.7 million.
On the international front, chief operating officer Stuart Haselden said China’s ecommerce channels, including Tmall, a WeChat site and a newly relaunched .cn site, generate about half of sales in the country. While Tmall sales have been strong, Haselden said the .cn site and WeChat sites will be taking a larger portion of ecommerce business in the future as they mature and offer integrations with stores in the country.
Tmall, which offers digital storefronts for brands, holds the No. 2 spot in the ranking of Internet Retailer Online Marketplaces. The WeChat platform allows customers to buy products directly on the messaging app, while also offering social sharing features and ease of access since payment and shipping info are prepopulated by the messaging service.
Across all ecommerce channels, traffic increased 41%, with conversions showing “significant improvement,” according to Haselden. He points to the increase in traffic as a main contributor to ecommerce sales growth.
In other earnings news:
- Online-only fashion retailer Boohoo.com Inc. (No. 244) increased revenue 38.5% to 254.3 million pounds ($320.1 million) from 183.6 million pounds ($231.1 million) for the first quarter of its fiscal 2020 ending May 31. Growth was strongest in the U.S., up 63.4% to 51.3 million pounds ($64.6 million). Nasty Gal reported the largest increase of the retailer’s brands, up 153% to 18.2 million pounds ($22.9 million). Boohoo acquired Nasty Gal for $20 million in 2017.
- In its first quarter earnings release ended April 30, Zara owner Inditex Group (No. 26) said its expansion of online sales to practically every country around the world is on track this year. The clothing conglomerate is leaning on ecommerce as a better way to gain clients in locations where it wouldn’t make sense to open shops. Six of the Spanish retailer’s chains added more than 100 online markets recently, expanding the reach of brands such as Massimo Dutti and Stradivarius. It didn’t break out ecommerce revenue for the quarter.
- Ascena Retail Group (No. 80), owner of apparel brands like Ann Taylor and Loft, generated 32% of revenue from direct sales, or $405.0 million, in the fiscal third quarter ending May 4. Those sales include both catalog and ecommerce sales and were up from 27% of sales during the same period a year ago, according to chief financial officer Robb Giammatteo. He said last year’s launch of outlet stores for Ann Taylor and Loft drove increases in digital revenue.
- Home goods retailer Restoration Hardware (No. 57) isn’t chasing digital sales, going against many of the recent retail trends. In the company’s fiscal first quarter results letter, CEO Gary Friedman said the retailer is focused on “creating a customer experience that cannot be replicated online.” RH is updating and expanding stores to include space for in-house interior design professionals, as well as adding membership perks that include access to those professionals for free in a bid to keep returns down and ensure consumers are buying the right products the first time.
Bloomberg contributed to this report.
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