Lululemon reports Q2 revenue up as inventories higher, international sales climb

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VANCOUVER — Lululemon Athletica Inc. says revenue climbed 29 per cent in the second quarter compared with the same period last year as it saw sales climb across its operations including higher gains in both online and international segments.

The Vancouver-based athletic clothing company, which reports in U.S. dollars, said Thursday it had revenue of US$1.9 billion for the quarter ending July 31, up from US$1.45 billion last year, as sales increased 28 per cent in North America and 35 per cent internationally.

Sales climbed as the company saw higher traffic both in stores and online, and it was better positioned for inventory than last year, said company chief executive Calvin McDonald on an analyst earnings call.

"Much of last year we were under-inventoried and not able to fully maximize our business. This year, we are in a much better position."

The sales translated into net income of US$289.5 million, or US$2.26 per diluted share, up from US$208.1 million or US$1.59 per share for the same quarter last year.

Lululemon was expected to earn US$1.87 per share on US$1.77 billion of revenue, according to financial data firm Refinitiv.

Total comparable sales were up 23 per cent, including 16 per cent for in-store and 30 per cent for direct-to-consumer net revenue.

Traffic to stores were up over 30 per cent, and to its online store up over 40 per cent, said McDonald.

"Importantly, we are not creating this traffic through markdowns or price promotions. Lululemon remains predominantly a full-price business," he said.

Lululemon has set a goal of doubling 2021's net revenue by 2026, including a quadrupling of international net revenue.

In that aim the company is especially focused on China, where it recently launched a digital flagship store on online retail giant JD.com and in the quarter added eight stores in China.

Lululemon will also shortly be opening stores in Spain, it's first new market in the region in three years.

Overall the company opened 21 net new company-operated stores during the second quarter, ending July with 600 stores.

Lululemon is also looking to boost sales and customer retention closer to home, including with a new two-tier membership program it plans to soon launch.

While recessionary concerns could potentially lead customers to cut back on spending, McDonald said the company hasn't seen any indication of that yet.

"Given the current macro backdrop, we have been looking closely at our guests data and metrics to identify any shifts in spending patterns, behaviours or habits. And to date I am pleased to share that we are not seeing any meaningful variation."

This report by The Canadian Press was first published Sept. 1, 2022.

The Canadian Press