Lululemon Reports Double-Digit Online Growth, Strong Comps

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Lululemon reported 48% growth in direct-to-customer sales during its second quarter. The apparel brand saw strong online traffic and a higher conversion rate resulting in a 47% comp increase. Ecommerce contributed $167 million or 23% of Lululemon’s topline.

COO Stuart Haselden said he was particularly pleased with the double-digit growth in ecommerce and attributed it to a site re-launch in the third quarter of 2017.

“Our guest is responding well to the improved experience,” said Haselden during an earnings call. “We still see opportunities to remove friction and increase efficiency on the site as we continue to improve the search and checkout functions as well as expand further into personalization.”

Over the last 12 months, Haselden said, Lululemon doubled the number of customers with whom it communicates. In the second quarter there was an 80% growth in its email file. “We continued to see significant opportunities to enhance our digital guest experience,” said Haselden.

Lululemon had a significant increase in the percentage of customers completing the checkout process, reflecting ongoing tactical improvements to the site.

“In personalization we now have our initial data scientist teams embedded within our brand teams who help deliver insights used to inform and drive our successful Father’s Day campaign,” said Haselden. “We’re making steady progress there and expect to see ongoing improvements over the next several quarters.”

Across the business, net revenue rose 25% to $724 million. Stores delivered a 10% comp increase on top of a 2% increase in the second quarter of last year.

Lululemon’s store square footage increased by 13% in Q2, with 42 net new stores in the past year, including four in Q2.

“The second quarter was very strong across all facets of the business,” said Lululemon Chairman Glenn Murphy. “In different product categories, our channels are in contact with our guests across all our markets.”

The company’s product assortment also performed well across every category in the quarter, Haselden said, with double-digit gains in women’s, men’s and accessories. Women’s and men’s pants had the highest margins, with both posting comps over 30%.

Haselden said Lululemon’s pillars for growth include strengthening its digital channels; ramping its international expansion with a near-term focus on Asia; innovating product assortments including accelerating growth in men’s; and continuing to roll out new format stores in North America.

“Our teams continue to deliver great results across these areas, which is setting the stage for the next chapters of growth,” said Haselden.

In China, ecommerce continues to lead the way with a comp increase of over 200%. Lululemon launched its WeChat store in China in Q2 and is on track to launch ecommerce sites in Korea and Japan by the end of the year.

 

 

 

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