• by Sarah Mahoney  @mahoney_sarah, December 7, 2018

Citing enhanced digital marketing efforts, Lululemon says third-quarter sales surged, with comparable sales up 17%, net revenues jumping 22% and e-commerce sales soaring 44%.

The retailer also announced it’s expanding a test of its first-ever loyalty program, charging members $128 per year in return for curated experiences and free shipping.

“It’s unique, disruptive, and perfect for Lululemon,” said CEO Calvin McDonald on a conference call webcast for investors.

The loyal program has been testing in Edmonton, Canada, offering perks like access to the retailer’s “Sweat” classes, early access to festivals and a free pair of pants or shorts for signing up. And, noted McDonald, “the response has been very strong and exceeded our expectations.”

Despite its strength in direct-to-consumer sales, which now account for a quarter of all sales, Lululemon said it is also beefing up investments in brick-and-mortar initiatives, including offering in-store pickup for online orders, and experiential retail.

McDonald said the company is also excited about its Asia expansion, especially in China, where 400 million digitally engaged millennials are rapidly exploring fitness brands.

Net revenues rose to $747.7 million, compared with $619 million in the same quarter last year. And income from operations was $135.9 million, an increase of 59% compared to $85.6 million in the third quarter of fiscal 2017.

The retailer repeatedly cited its newly strengthened digital strategies for the gains. “Improving capabilities in personalization within digital marketing are allowing us to speak to guests in more-informed and efficient ways,” said Stuart Haselden, COO, on the call.

“Guest acquisition increased 41%, while our e-mail list grew 19%," he added. "These efforts collectively contributed to a store traffic increase in the quarter in the high single digits, and an increase in traffic to our e-commerce site of over 35%.”

He said Thanksgiving web sales set a record, as did Black Friday, both eclipsing Cyber Monday.

Besides strength in outerwear and bras, the retailer said sales of men’s apparel is strong, ahead of schedule on reaching its goal of $1 billion in annual sales for men’s clothing.