Lululemon Counting on Growth of Men’s Line to Reach $4 Billion by ‘20
Lululemon (LULU) introduced its first ever marketing campaign targeting male clientele in fiscal Q3; growing annual men’s sales 21% YOY, during the quarter. The athleisure company has publicly stated it is targeting $4 billion in annual revenue by 2020; projecting $1 billion in sales from the men’s division. During the Q3 earnings call, CEO Laurent Potdevin said the company currently sits “almost halfway there”; remaining on track to accomplish both goals, on time.
Howie Long-Short: LULU reported Q3 revenue grew 14% YOY (its 2nd straight quarter of growth) to $619 million; with gross profit rising 16% to $322 million. E-Commerce (+25% YOY) and international (i.e. China) growth helped drive the increases. It’s worth noting that the company set records for sales on both Black Friday and Cyber Monday, boding well for Q4 financials. Company shares are up 6% since the earnings release and 11% YTD.
Fan Marino: Kevin Watley, a consultant with GlobalData Retail, said that LULU’s ability to resist excessive discounting has strengthened the company bottom line (52% profit margin). Profit margins may be strong, but it’s corporate policy that is preventing discounted sales; not the company’s ability to restrain itself in a promotional market. The LULU website currently has 160 items on sale, but all are final sale; meaning no returns or exchanges. Who is buying a $69 t-shirt that can’t be exchanged if it doesn’t fit properly?
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