Lululemon Says It’s on Track for Better-Than-Expected Growth — Here’s What’s Driving the Momentum
As renewed lockdowns led more people to hunker down indoors, athleisure behemoth Lululemon now expects fourth-quarter earnings and sales to be at the high end of its prior forecast.
The Vancouver-based brand previously estimated its revenue growth for the period ended Jan. 31 would be in the mid-to-high teens percentages, while adjusted earnings per share were predicted to improve mid-single digits. It now anticipates that both EPS and revenues will be at the higher point of those ranges.
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“We’re pleased with the momentum over the holiday period as our investments in Lululemon and Mirror allowed us to connect with guests both physically and digitally,” CEO Calvin McDonald said in a statement. “We remain confident about our opportunities in 2021 and committed to our Power of Three growth plan.”
Lululemon’s acquisition of Mirror — founded two years ago by former Lululemon ambassador Brynn Putnam — adds to the company’s five-year plan unveiled in 2019. At the time, McDonald announced expectations to more than double the brand’s digital revenues by 2023 through omnichannel guest experiences.
Analysts were subsequently bullish on the acquisition of the in-home fitness startup, known for its interactive mirror workout platform that features live and on-demand classes. Over the past several months, Lululemon has leveraged its brick-and-mortar store base and e-commerce capabilities to sell Mirror, as well as solidified its foothold in the home fitness market, which has only swelled amid the COVID-19 health crisis. (The partnership between the two firms began in mid-2019 with Lululemon’s initial investment in Mirror.)
What’s more, Lululemon is gearing up for the launch of its inaugural shoe line. In its third-quarter conference call in mid-December, McDonald revealed plans to introduce the brand’s entry in footwear in the back half of 2021 and begin selling in early 2022. While it faces competition from heavyweights Nike and Adidas, Lululemon appears to have plenty of resources to invest in the category: For the third quarter, it logged a 22% gain in revenues to $1.1 billion.
Its success in the past year has led many investors to believe Lululemon might exceed rather than just meet its guidance. For the company’s fourth quarter, Wall Street is betting on earnings of $2.51 per share and sales of $1.66 billion. Its stock has improved roughly 52% since the start of last year.
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