Lululemon's Q4 sales jump, aims to double revenues by 2026 (2024)

Lululemon Athletica Inc. reported fourth quarter net revenue increased 30 percent to 2.8 billion dollars or increased 33 percent on a constant dollar basis.

For fiscal 2022, the company’s net revenue increased 30 percent to 8.1 billion dollars or increased 32 percent on a constant dollar basis.

The company said in a statement that its Power of Three x2 growth plan calls for a doubling of the business from 2021 net revenue of 6.25 billion dollars to 12.5 billion dollars by 2026.

Commenting on the financial results, Calvin McDonald, the company’s chief executive officer, said: "In the fourth quarter and full year 2022, we delivered strong results across the business driven by our innovative products, powerful guest experiences, and strategic market expansion. As we enter 2023, we look forward to another year of strong momentum across the globe and delivering on our Power of Three ×2 growth plan."

Lululemon reports strong Q4 results

The company’s net revenue increased 29 percent in North America and increased 35 percent internationally. Total comparable sales increased 27 percent or 30 percent on a constant dollar basis, while comparable store sales increased 15 percent or 17 percent on a constant dollar basis.

The company said, direct to consumer net revenue increased 37 percent or 39 percent on a constant dollar basis and represented 52 percent of total net revenue compared to 49 percent for the fourth quarter of 2021.

Fourth quarter gross margin decreased 300 basis points to 55.1 percent and adjusted gross margin decreased 70 basis points to 57.4 percent. Operating margin decreased to 11.3 percent from 27.7 percent in the fourth quarter of 2021, while adjusted operating margin increased 50 basis points to 28.3 percent.

Lululemon’s FY22 revenues increase by 30 percent

Company operated store net revenue increased 29 percent in 2022. Net revenue increased 29 percent in North America and increased 35 percent internationally. Total comparable sales increased 25 percent or 28 percent on a constant dollar basis.

Comparable store sales increased 16 percent or 19 percent on a constant dollar basis, while direct to consumer net revenue increased 33 percent or 35 percent on a constant dollar basis and represented 46 percent of total net revenue compared to 44 percent for 2021.

Gross margin decreased 230 basis points to 55.4 percent, while adjusted gross margin decreased 150 basis points to 56.2 percent. Operating margin decreased to 16.4 percent from 21.3 percent in 2021 and adjusted operating margin increased 10 basis points to 22.1 percent.

Diluted earnings per share were 6.68 dollars compared to 7.49 dollars in 2021 and adjusted diluted earnings per share were 10.07 dollars compared to 7.79 dollars in 2021.

The company opened 81 net new company-operated stores during the year, ending with 655 stores.

Lululemon expects 15 percent revenue growth in fiscal 2023

For the first quarter of fiscal 2023, the company expects net revenue to be in the range of 1.890 billion dollars to 1.930 billion dollars, representing growth of approximately 18 percent.

Diluted earnings per share are expected to be in the range of 1.93 dollars to 2 dollars for the quarter.

For fiscal 2023, the company expects net revenue to be in the range of 9.300 billion dollars to 9.410 billion dollars, representing growth of approximately 15 percent.

Diluted earnings per share are expected to be in the range of 11.50 dollars to 11.72 dollars for the year.

Lululemon further said that the key pillars of the company’s Power of Three x2 plan are product innovation, guest experience, and market expansion and the growth strategy includes a plan to double men's, double direct to consumer, and quadruple international net revenue relative to 2021.

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Lululemon Athletica Inc. Financial Overview:

Fourth Quarter Financial Performance:
- Net Revenue: Lululemon reported a 30 percent increase in fourth-quarter net revenue to $2.8 billion, or a 33 percent increase on a constant dollar basis.
- Regional Breakdown: Net revenue increased by 29 percent in North America and 35 percent internationally.
- Comparable Sales: Total comparable sales rose by 27 percent (30 percent on a constant dollar basis), with comparable store sales increasing by 15 percent (17 percent on a constant dollar basis).
- Direct-to-Consumer: DTC net revenue increased by 37 percent (39 percent on a constant dollar basis), representing 52 percent of total net revenue.
Fourth Quarter Profitability Metrics:
- Gross Margin: Fourth-quarter gross margin decreased by 300 basis points to 55.1 percent.
- Adjusted Gross Margin: Adjusted gross margin decreased by 70 basis points to 57.4 percent.
- Operating Margin: Operating margin decreased to 11.3 percent from 27.7 percent, while adjusted operating margin increased 50 basis points to 28.3 percent.
- Earnings Per Share (EPS): Diluted earnings per share were 94 cents, compared to $3.36 in the fourth quarter of 2021. Adjusted diluted earnings per share were $4.40, compared to $3.37 in the same period last year.
Full-Year 2022 Performance:
- Net Revenue Growth: For fiscal 2022, Lululemon's net revenue increased by 30 percent to $8.1 billion, or 32 percent on a constant dollar basis.
- Segment Breakdown: Net revenue increased by 29 percent in North America and 35 percent internationally.
- Comparable Sales: Total comparable sales increased by 25 percent (28 percent on a constant dollar basis), with comparable store sales increasing by 16 percent (19 percent on a constant dollar basis).
- Direct-to-Consumer: DTC net revenue increased by 33 percent (35 percent on a constant dollar basis), representing 46 percent of total net revenue.
Full-Year Profitability Metrics:
- Gross Margin: Full-year gross margin decreased by 230 basis points to 55.4 percent. Adjusted gross margin decreased by 150 basis points to 56.2 percent.
- Operating Margin: Operating margin decreased to 16.4 percent from 21.3 percent, while adjusted operating margin increased by 10 basis points to 22.1 percent.
- Earnings Per Share (EPS): Diluted earnings per share were $6.68, compared to $7.49 in 2021. Adjusted diluted earnings per share were $10.07, compared to $7.79 in 2021.
Outlook for Fiscal 2023:
- Revenue Guidance: Lululemon expects approximately 15 percent revenue growth in fiscal 2023.
- First Quarter Outlook: The company anticipates first-quarter net revenue in the range of $1.890 billion to $1.930 billion, representing growth of approximately 18 percent. Diluted earnings per share are expected to be in the range of $1.93 to $2.
- Full-Year Outlook: For fiscal 2023, the company projects net revenue in the range of $9.300 billion to $9.410 billion, with diluted earnings per share expected to be in the range of $11.50 to $11.72.
Power of Three x2 Growth Plan:
- Lululemon's growth strategy, known as the Power of Three x2 plan, aims to double the business from 2021 net revenue of $6.25 billion to $12.5 billion by 2026.
- Key Pillars: The growth plan is centered around product innovation, guest experience, and market expansion.
- Specific Targets: The strategy includes doubling men's, doubling direct-to-consumer, and quadrupling international net revenue relative to 2021.

In summary, Lululemon's financial results indicate robust growth, particularly in net revenue and direct-to-consumer sales, despite some margin pressures. The company's strategic growth plan outlines ambitious targets for the coming years, emphasizing innovation, customer experience, and global expansion.