Is Lululemon out of the woods? Is it in the clear yet? Things are certainly looking up for the activewear brand. In the three months preceding May 1, comparable sales increased by 8 percent: stores up by 5 percent and e-commerce up by 18 percent. Net revenue increased by 17 percent to $495.5 million and profits increased 16 percent to $239.1 million. In an earnings call on Wednesday, CEO Laurent Potdevin was pleased with the results and said the company has rebalanced the inventory problems that have plagued it in the past.
Potdevin's five-year progress plan — focusing on product innovation, North America sales potential, digital culture and international expansion — is still in its early stages. But while brick-and-mortar foot traffic is down, sales conversions are improving and the new product is showing up on the sales floor faster than before. Changes in the supply chain are being made to increase gross profit margins, which Potdevin said will start to improve in the second quarter and continue throughout the year.
The CEO also called out the successful categories driving sales, especially those involving product innovation. Women's tops and bras are still strong, as are looser, layering tops and the popular Swiftly running apparel category. Meanwhile for men, sweat-targeting products and the brand's "ABC (anti-ball crushing)" line of pants and shorts — designed to "give the boys some room" — are key categories. Following that momentum, Potdevin said new ABC styles are coming this month. The line currently has prime real estate on Lululemon.com, signifying a big push.
Lululemon opened 11 stores in the quarter, including its first in Singapore, and opened its first Japanese showroom. The Lululemon and Ivivva Athletica store count now comes to a total of 373 locations, 57 more than last year. Potdevin announced plans, already underway, to open stores and shop-in-shops in Zurich and London, respectively. The company plans to open 40 more stores this year in total, and 11 will be international.