Lululemon Isn’t Sweating Sales as Momentum Swells

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Lululemon Isn’t Sweating Sales as Momentum Swells

By Jamie Grill-Goodman - 09/06/2019

Lululemon Athletica reported better-than-expected revenue and profit in its second quarter as the athletic apparel retailer focused on improving its online presence and evolving its experiential retail. Up next, Lululemon announced it will open a second experiential store in the Mall of America.

"We're pleased with the ongoing strength across our business,” said CEO Calvin McDonald. “We continue to make progress in delivering against our Power of Three growth pillars - product innovation, omni-guest experience, and market expansion. Our success demonstrates the significant runway in front of lululemon.”

Lululemon announced it will open its second full experiential store in Minneapolis’s Mall of America.

Lululemon soared as much as 6% in early Friday trading after beating analysts' estimates and boosting its guidance for yearly profits, Markets Insider reported.

Increased traffic in the quarter continues to drive lululemon’s comps, both in-store and online. The company's direct-to-consumer revenue, which includes online and mobile sales, spiked 30% in Q2 2019, while comparable store sales increased 10%.

When asked about the traffic increases and improvement in conversion during the retailer's recent earnings call, McDonald credited the momentum that lululemon is seeing to three things: the athletic space being healthy relative to other sectors in both apparel in retail in general; the business being less dependent on seasonal fluctuations; and compelling product, brand activations and lululemon’s continued improvement in its data analytics and digital marketing.

In the retailer’s digital channel, it posted a 31% constant dollar comp increase on top of a 47% increase last year. E-commerce contributed nearly 25% of total revenue in the quarter.

“Within our digital business guest engagement continues to be strong and we are focused on pushing forward with improvements to our sites and mobile apps,” noted Celeste Burgoyne, EVP, Americas and Global Guest Innovation.

To this end, lululemon is in the process of rolling out new search and browse functionality, which will further enhance and personalize the experience for e-commerce shoppers. The retailer is also enhancing its product details page across its digital ecosystem, which will improve product storytelling and product education to further support digital conversion.

The retailer also reported it has rolled out buy-online pickup in-store capabilities in nearly all of its North American stores across, up from 150 stores at the end of its first quarter 2019.

“So far the favorable response from guests shows how much they appreciate the flexibility and efficiency of this service,” noted Burgoyne.

lululemon expanding experiential store concept

Lululemon announced it will open its second full experiential store in Minneapolis’s Mall of America.

The company opened its first experiential store in July, a two-level, more than 20,000-square foot store in Chicago’s upscale Lincoln Park neighborhood. The store offers dedicated studio space for sweat classes and meditation, locker rooms and showers, healthy food at its fuel bar, a community space created simply to foster connection, and an elevated shopping experience.

“We are leaning into our vision and engaging with guests in compelling new ways both inside and outside of the store,” said Burgoyne. “Our Lincoln Park store is truly the physical manifestation of the heart and soul of Lululemon which is …be an active, cultivating mindfulness and developing meaningful connections.”

“We're really excited with Lincoln Park's performance since its opening in July as it provides our guests, educators and ambassadors a space to sweat, grow and connect together all under one roof,” she continued.

The new experiential store in Mall of America is expected to open in November.

“This location will offer several of the features found in Lincoln Park and we are excited about what the store can teach as a high volume mall-based locations,” said Burgoyne.