At the heart of Lululemon’s massive loyal following lies its continued effort to offer a broader range of products that go well beyond the yoga and athleisurewear the brand is known for.
In fact, during the company’s Q2 earnings call on Thursday, August 31, 2023, an analyst from Barclays said, “Every time you get on a call, there’s like another list of five new things that we didn’t know about. So, I’m just wondering, have you accelerated innovation turnover time, the pipeline, or the investment?”
The question arose as Lululemon CEO Calvin McDonald revealed a 44% increase in accessory sales, driven by items like crossbody style backpacks and small pouches. The Everywhere Belt Bag, in particular, saw double-digit growth due to its expanded range of sizes, colors, prints, and patterns. This surge in accessory sales has led to an upward revision of the projected fiscal year revenue, now estimated to be between $9.51 billion and $9.57 billion. North American revenue increased by 11%, and international revenue grew by 52%, with a significant focus on expanding in the Asia-Pacific region.
Lululemon’s quarterly results align with its planned growth trajectory, which aims to double its business from a 2021 net revenue of $6.25 billion to $12.5 billion by 2026. The company is also making strides in footwear and plans to introduce men’s footwear in the near future.
Additionally, Lululemon is expanding its presence in the Asia-Pacific region, opening new stores and benefiting from the resurgence of the travel and tourism industry in the area. McDonald’s emphasized the successful launch of the company’s first store in Thailand as part of this expansion.
In Q2 2023, net revenue increased 18% to $2.2 billion, with growth in North America (11%) and internationally (52%). Comparable sales rose 11% (13% adjusted for currency), and direct-to-consumer (DTC) net revenue grew 15% (17% adjusted). In Q2, DTC net revenue was 40% of total revenue, down from 42% in the same period the year before. Overall, gross profit increased 23% to $1.3 billion, resulting in a gross margin of 58.8%.
Photo credit: Lululemon
