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Lululemon’s Nearly Perfect Second Quarter

On Thursday, August 30th, 2018, Lululemon Athletica Inc. (NASDAQ:LULU) posted their second-quarter earnings results which trumped expectations and showed some very solid growth across the board.

Lululemon Athletica Inc. (NASDAQ:LULU) is a widely-known designer and distributor of athletic apparel across the globe.  The company operates through both their brick-and-mortar locations as well as their online stores: and

The company is particularly known for their strong brand loyalty and innovative customer engagement.  By leveraging their position on social medias Lululemon is effectively able to drive this traffic towards their brick-and-mortar and online stores.

LULU shares have rose nearly 15% since the earnings call to highs of $158.46 per share from $137.00 per share.  This explosive price action is most likely in reaction to the details within the earnings report we’ll discuss below.

Thanks to an increase in their pant sales as well as an increase in sales throughout Asia, the company reported revenues climbing 25% to $724 million.   Lululemon’s women’s pants category rose over 30% and their sales in Asia climbed 50% comparatively.

Additionally, Lululemon has targeted to have 25% of their total sales to come via e-commerce by 2020, but they are actually pretty darn close at 24.6% of sales this quarter coming via e-commerce.  E-commerce sales rose 65% this quarter, so if Lululemon can sustain this growth, their 2020 e-commerce target can potentially be hit much sooner.

What is interesting is that Lululemon’s overseas sales count for only roughly 10% of total sales.  This is relatively low as their major competitors have numbers closer to 40% of total sales coming from overseas.  As the overseas market shows huge potential for continuing growth Lululemon plans to expand their operations in Japan and Korea later this year.

Do you think Lululemon will continue this “start-up” like growth into the end of the year, or will they fall short like other retailers have?

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