Lululemon surprises the market

lululemon-1Captainless but not rudderless, activewear retailer Lululemon Athletica has posted a better than expected first quarter result as it continues searching for a new chief executive.

The Canadian business lifted its full year revenue outlook on Thursday after reporting a 19 per cent increase in comparable sales for the quarter ended 29 April, ahead of the 12 per cent increase analysts expected.

Full year revenue is now forecast between US$3.04 – US$3.07 billion, up from the US$2.9 – $3 billion previously expected. Comparable sales guidance was also firmed, expected to be in the high single digits.

The company is still without a chief executive, following the shock departure of Laurent Potdevin in February, who allegedly behaved in an unprofessional manner.
But this doesn’t appear to have slowed growth, with chief operating officer Stuart Haselden saying that momentum remained strong.

“Our first quarter results reflect the ongoing strength of our business and our continued focus on product innovation, global growth, digital acceleration, and, most importantly, investing in our people,” he said in a statement on Tuesday.

Lulu’s net revenue increased by 25 per cent in the first quarter to US$649.7 million, while widening margins delivered a 130 per cent increase in income to US$104.3 million.

The result was achieved against an intensifying competitive backdrop, with the likes of Adidas, Nike and Gap’s Athleta all increasingly investing in the athleisure trend.
GlobalData managing director Neil Saunders said Lulu was cycling soft comps, but that it was clearly outperforming the market by a “considerable degree”.

“Lululemon still has a lot of untapped potential it can use to drive future results,” Saunders said. “These include international expansion and further penetration into menswear, where it has had much success but remains below-the-radar for many shoppers.”

Lulu opened seven stores during the first quarter, bringing its total count to 411.

The business does not split out revenue by operating region, but it has 36 retail stores and outlets in Australia and New Zealand, as well as a dedicated e-commerce platform.

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