Lululemon just posted a quarter that should be the envy of its peers in the athletic-apparel world.
Lulu grew overall sales, saw a nice expansion in its online business, and did so while being more profitable than analysts were expecting. Sales at existing stores — the most watched same-store sales metric — were up 2% for the quarter.
Investors are celebrating the news; Lulu shares are up 7.3% Friday afternoon, to $61.76.
With malls and other traditional retail outlets under pressure, brands are looking for new ways to reach consumers. Lululemon has stepped up its website through better photography and online campaigns, and the moves appear to be paying off. An online warehouse sale provided a nice boost to the company’s e-commerce segment last quarter, but online sales were up even if you exclude the impact of that sale.
Lulu also raised its earnings and revenue forecasts for the full year.
Newer areas of focus, such as menswear and Asia, helped the company drive sales as well. The company is now looking into new product areas. On a conference call following the earnings release, Lulu’s management spoke of a “pilot program” with shoe company APL.
Lulu’s interest in footwear comes as incumbent players Nike and Under Armour struggle to attract customer interest, thanks to a rather stale crop of sneakers. Lululemon CEO Laurent Potdevin said that the company was intrigued by the fact that APL is also at “the intersection of function and fashion.” The company is not yet including APL in its goal toward reaching $4 billion in annual revenue by 2020. (Lululemon generated $2.3 billion in revenue last year.)
Big Picture: Lululemon reported a strong quarter of sales that looks all the better given the recent struggles of other retailers.