The Vancouver-based athletic apparel and accessories firm reported quarterly earnings Wednesday after the market closed, revealing further gains on both top and bottom lines, while raising its full-year guidance. Shares of Lululemon shot up 13.2 percent to $431 in after-hours trading as a result.
“Our second-quarter results demonstrate the continued momentum across the business and how we are living into our Power of Three growth plan and Impact Agenda commitments,” Calvin McDonald, the firm’s chief executive officer, said in a statement. “We launched exciting new products, experienced strength across channels and geographies, and announced new partnerships that will allow us to become a leader in product sustainability. I’m inspired every day by our teams around the world for their continued enthusiasm, agility and commitment to the brand.”
For the three-month period ending Aug. 1, net revenues increased 61 percent to $1.5 billion, up from nearly $903 million during 2020’s second quarter. At company-operated stores, net revenues surged 142 percent to more than $695 million. But direct-to-consumer sales, which includes e-commerce, also increased, up 8 percent in the quarter to $597 million.
By region, revenues in North America rose 63 percent, while revenues internationally increased 49 percent.
McDonald told analysts on a conference call that Lululemon is on track to surpass its 2023 revenue targets by the end of this year while also doubling the e-commerce business and likely doubling the men’s business this year.
“We are playing the long game and have much to unlock in the coming years,” the CEO said.
The company logged $208 million in profits as a result, up from $86 million the same time last year.
In addition, Lululemon now expects current quarter net revenues to be in the range of $1.4 billion and $1.43 billion, with diluted earnings per share between $1.28 and $1.33 apiece for the quarter. For the full year, the firm anticipates net revenues between approximately $6.19 billion and $6.26 billion, with diluted earnings per share between $7.16 and $7.26 each for the year.
“Our performance in [the second quarter] was driven by a strong response to our product offering, improving productivity in our stores and sustained strength in e-commerce,” said Meghan Frank, Lululemon’s chief financial officer. “While we continue to navigate the COVID-19 environment, including supply chain headwinds, I’m excited with our momentum as we head into the second half of the year and pleased to be able to increase our guidance.”
Executives on the call acknowledged some headwinds along the supply chain, including increased costs, but said the company is taking precautions to mitigate risks, expanding its sourcing base and using air freight to move shipments.
“Air freight is a muscle that as a growth company we often leverage,” Frank said.
The retailer opened 11 new company-operated stores in the last three months, ending the quarter with 534 units. In June, the company said it planned to open between 45 and 55 new retail locations in fiscal year 2021, taking advantage of reduced occupancy rates.
During the quarter, Lululemon revealed plans for its upcoming collection of yoga mats and bags made from mushrooms (which are coming in 2022). In addition to yoga apparel, McDonald called out bras as an opportunity for growth, as well as a way to increase loyalty among guests.
Last month, the company said it would increase its minimum wage to a new higher range of $15 and $17 an hour, depending on location, starting Sept. 27, for all store associates and Guest Education Center employees, or contact center employees, in North America. The retailer also has plans to hire more than 8,000 new team members in stores and at contact centers across North America for the holiday shopping season.
The firm ended the quarter with $1.17 billion in cash and cash equivalents. Shares of Lululemon, which closed down 1.5 percent to $380.85 Wednesday, are up 17.5 percent, year-over-year.