The Vancouver-based clothing retailer’s net income reached $321 million in the primary quarter (Lululemon reports in U.S. dollars), up from $290 million a 12 months earlier. Net sales for the period ended April 28 were $2.2 billion, compared with about $2 billion a 12 months earlier.
Lululemon’s sales and profits despite economic pressure
The price increases got here despite higher inflation and rates of interest dampening consumer spending, and despite some missteps by the brand in the ladies’s clothing and bags categories.
“In women’s, we did not maximize business in the U.S. due to several missed opportunities, including a color palette that was too narrow and our core assortment, particularly in leggings,” said Calvin McDonald, CEO of Lululemon Athletica, in a conference call to debate the outcomes. “Where we had color, customers responded well. We simply needed more as they are looking for additional choices and some of our smaller sizes are also out of stock.”
Lululemon’s historical reporting
In previous quarters, McDonald said, the retailer had seen a rise in younger shoppers, which necessitated smaller sizes and a wider range of colours, which were also not all the time in stock on the time. McDonald believes Lululemon (LULU/TSX) remains to be well positioned to weather such headwinds, particularly demand for smaller sizes, which he described Wednesday as “within our control.”
Hole-in-One innovation coming later in 2024, together with the competition
“We expect a lot of these things to be addressed in the second half of the year,” he said, noting that Lululemon is planning a wave of innovations for that a part of the 12 months.
In addition to merchandising challenges, more retailers are also moving into the brand’s territory. Los Angeles-based yoga apparel maker Alo recently expanded its presence in Canada, while rival Vuori of San Diego, California, is rumored to be fascinated with an IPO this 12 months.
Neil Saunders, managing director of GlobalData Retail, sees rival Lululemon’s “biggest problem” as being that it offers customers more selection. “The good news for Lululemon is that, according to our data, very few American customers are abandoning Lululemon entirely in favor of other brands,” he said in a note to investors. “They are simply spreading their athleisure spending more widely.”
But Lululemon cannot rest on its laurels, he said, and advisable the corporate double down on newer sports categories like golf.
