Blending Experiences With Advertising, Lululemon Continues To Gain Share

Lululemon is one resilient retailer. While plenty of competitors are posting sales declines and blaming an unsettled economy, the athleisure brand continues to prove that when consumers love a brand, they’re not afraid to spend.

The Vancouver-based company’s latest financial results include a hefty 19% jump in revenue, with sales in the fiscal third quarter climbing to $2.2 billion, compared to $1.86 billion in the third quarter of last year. Comparable sales grew 13%. And net income came in at $248.7 million, down from $255.5 million in the year-ago period.

Direct-to-consumer revenue rose 18% and now accounts for 41% of total sales.

Both sales and profits exceeded analyst expectations.

Showing it’s not immune to pared-back consumer spending, Lululemon did offer a more subdued forecast than expected for the coming months, despite reporting a gangbuster start to the holiday season. That includes its best-ever results on Black Friday.



The company now expects an increase of between 13% and 14% in the fourth quarter of 2023, in the range of $3.14 billion to $3.17 billion. That includes a forecast of continued double-digit growth internationally, with sales in North America likely to advance in the high single digits.

In a conference call webcast for investors, Calvin McDonald, chief executive officer, elaborated on ways the company is combining community-building events and experiences with advertising, continually building market share.

He called out such brand activations as a massive three-day well-being extravaganza in China, which drew 12,000 guests and generated 3 billion impressions. A launch party with new partner Peloton in Chicago attracted 2,000 guests.

“We are taking multiple paths to building brand awareness and consideration across our global markets,” he said. “You can expect more of this type of marketing execution from us going forward," McDonald said.

Product innovations include Wundermost, a new collection of bodywear, which has met with “great initial response.”

The company cited slowing sales in men’s products in North America. “He is spending less in apparel in general,” he said. "We continue to put on market share.”

Lululemon tested TV advertising for men in the U.S. with a campaign focused on its ABC bottoms. “We are encouraged by the early results and the buzz created by this targeted investment, and we plan to continue the campaign next year,” added McDonald.

Lululemon’s enviable results “showcase the persistent underlying growth potential and economic resiliency of Lululemon,” writes Brian Nagel, who follows the company for Oppenheimer.

He continues to rate the company as likely to outperform peers, saying the latest numbers demonstrate “an increasingly established, yet still up and coming, omnichannel-enabled, merchandising-led disruptor within athleisure, and apparel broadly.”

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