Lululemon quarterly sales top expectations, CEO ‘cautiously optimistic’ for rest of 2020
Lululemon Athletica store logo and sign in Philadelphia.
Gilbert Carrasquillo | Getty Images
Lululemon on Tuesday reported surprise revenue growth, despite lockdowns during the height of the coronavirus pandemic, as stores started reopening in the fiscal second quarter and consumers stocked up on workout apparel and yoga accessories.
Its stock fell by more than 5% in after-hours trading.
CEO Calvin McDonald said the retailer is “cautiously optimistic” about the rest of the year. Lululemon is not offering a 2020 outlook at this time. It said almost all, 97%, of its stores globally have reopened to date and store sales are averaging about 75% of their levels a year ago.
Here’s how the retailer did for the quarter ended Aug. 2 compared with what analysts were expecting, based on Refinitiv data:
- Earnings per share: 74 cents, adjusted, vs. 55 cents expected
- Revenue: $902.9 million vs. $842.5 million expected
On an unadjusted basis, Lululemon’s net income shrank during the second quarter to $86.8 million, or 66 cents a share, from $125 million, or 96 cents a share, a year earlier. Excluding one-time charges, the company said it earned 74 cents per share, topping expectations for 55 cents.
Its revenue rose about 2% to $902.9 million from $883.4 million a year earlier, topping expectations for $842.5 million.
Its online sales were up 157%.
Lululemon ended the period with $523 million in cash and cash equivalents on its balance sheet.
At the end of June, Lululemon announced its plans to buy the at-home fitness company Mirror, which sells a $1,500 high-tech mirror to stream live workout classes. It closed on the transaction in early July. Lululemon is looking to do more in the connected fitness space, growing beyond its clothing business, especially with more consumers stuck at home during the pandemic looking for ways to break a sweat.
Planning for the all-important holiday season, CEO McDonald said Tuesday that Mirror’s mirror will be available for sale in 10 to 15 of the company’s stores by early in the fourth quarter, and Lululemon is also beginning to market it online and on social media channels. The company expects Mirror to do more than $150 million in revenue this fiscal year.
“We’ll set the stage for next year, and we expect to be more aggressively leveraging the power of the Lululemon ecosystem to grow the Mirror business,” McDonald said Tuesday during a conference call with analysts.
Lululemon also said it plans to move planned e-commerce investments, including in its customer service call centers, even earlier, to prepare for the upcoming holidays. It also plans to open roughly 70 holiday pop-up shops, up from 51 last year.
As of Tuesday’s market close, Lululemon shares were up more than 51% this year. It has a market cap of $45.5 billion.