Lululemon's quarterly results are in, and once again, the apparel company has beaten expectations. It's issuing a sales forecast rosier than many predicted, confident that it can handle the inventory and supply-chain snags that are dogging competitors.
A detailed new research report from NPD Group indicates that the launch of Lululemon’s first shoe, debuting this week, may well intensify sales gains, cementing the already close relationship the brand has with active women.
Lululemon's revenue climbed 23% to $2.1 billion for the fourth quarter, with comparable sales rising 22%. The Vancouver-based retailer says income from operations advanced 29% to $590.6 million. Direct-to-consumer net revenue gained 17%.
For the full fiscal year, net revenue jumped 42% to $6.3 billion. The company ended the year with 574 stores.
Those impressive gains came in all products, channels, and regions.
Lululemon is rolling out Blissfeel, a women's running shoe, its first entry in the footwear category. The debut "has the potential to be another market gamechanger," writes Matt Powell, vice president and senior sports industry advisor at NPD. "In my eyes, the brand's performance footwear release is a pretty big deal."
The market research company looked closely at Lulu's women customers, using NPD's checkout data, and painted a detailed picture of how intensely loyal these consumers are -- even though Lululemon's products cost substantially more than competitors'.
"Driven by the brand's higher price point compared to its competitors, women who bought Lululemon activewear spent 30% of their total activewear purchases there in the 12 months ending January 2022," Powell says. By comparison, competitors like Fabletics, Under Armour and Adidas all capture less than 10%.
It's too early to tell how the new shoe line will impact competitors. NPD's research shows that Lululemon's consumers are buying performance shoes from Nike, Brooks, Adidas, ASICS, and Hoka.
"A dirty little secret of the athletic shoe business is that many women's sneakers in the market today were originally designed for men," Powell says. "Lululemon has always been laser-focused on female consumers, and this focus has shone through in the footwear design."
The launch is factoring into Lululemon's bullish growth forecast. It anticipates revenue between $7.49 billion and $7.62 billion in the coming fiscal year, representing 20% to 22% growth.
Some Wall Street analysts are optimistic Lululemon can keep its strong growth streak going. "The company's confident outlook is supported by a full pipeline of innovation," writes Mark R. Altschwager, an analyst who covers the company for Baird. That includes new On The Move apparel and expanded golf and tennis assortments, as well as the new shoes.