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Lululemon Athletica reports rise in Q4 sales and earnings

By Prachi Singh

31 Mar 2021

Business

For the fourth quarter of 2020, net revenue at Lululemon Athletica increased 24 percent to 1.7 billion dollars, while on a constant dollar basis, net revenue increased 22 percent. The company’s net revenue increased 21 percent in North America and increased 47 percent internationally. Total comparable sales increased 21 percent or increased 20 percent on a constant dollar basis.

Diluted earnings per share were 2.52 dollars compared to 2.28 dollars in the fourth quarter of 2019 and adjusted diluted earnings per share were 2.58 dollars.

Commenting on the trading results, Calvin McDonald, the company’s Chief Executive Officer, stated: “Our continued growth demonstrates the strength of Lululemon — before, during and as the pandemic subsides. We are still in the early innings of our growth, fuelled by exciting innovations that create even more opportunity into the future.”

Lululemon’s Q4 trading update

The company said in a statement that direct to consumer net revenue increased 94 percent or increased 92 percent on a constant dollar basis. Comparable store productivity was 72 percent or 71 percent on a constant dollar basis, representing a comparable store sales decrease of 28 percent or a decrease of 29 percent on a constant dollar basis. Direct to consumer net revenue represented 52 percent of total net revenue compared to 33 percent for the fourth quarter of 2019.

Gross profit for the quarter increased 25 percent to 1 billion dollars and gross margin increased 60 basis points to 58.6 percent. The company added that income from operations increased 10 percent to 457.9 million dollars and adjusted income from operations increased 12 percent to 465.7 million dollars. Operating margin decreased 330 basis points to 26.5 percent, while adjusted operating margin decreased 290 basis points to 26.9 percent.

The company opened six net new company-operated stores during the quarter, ending with 521 stores.

Lululemon’s results for 2020 compared to 2019

The company’s net revenue for 2020 increased 11 percent to 4.4 billion dollars, while on a constant dollar basis, net revenue increased 10 percent. Direct to consumer net revenue increased 101 percent and increased 101 percent on a constant dollar basis. Company operated store net revenue decreased 34 percent.

The company said, net revenue increased 8 percent in North America and increased 31 percent internationally. Direct to consumer net revenue represented 52 percent of total net revenue compared to 29 percent for 2019.

Gross profit for the year increased of 11 percent to 2.5 billion dollars and gross margin increased of 10 basis points to 56 percent. Income from operations decreased 8 percent to 820 million dollars and adjusted income from operations decreased 4 percent to 849.8 million dollars. The company’s operating margin decreased 370 basis points to 18.6 percent, while adjusted operating margin decreased 300 basis points to 19.3 percent.

Diluted earnings per share were 4.50 dollars compared to 4.93 dollars in 2019, while adjusted diluted earnings per share were 4.70 dollars in 2020.

The Company opened 30 net new company-operated stores during the year, ending with 521 stores.

Lululemon reveals outlook for Q1 and FY21

For the first quarter of fiscal 2021, the company expects net revenue to be in the range of 1.100 billion dollars to 1.130 billion dollars. Diluted earnings per share are expected to be in the range of 81 cents to 85 cents for the quarter and adjusted earnings per share are expected to be in the range of 86 cents to 90 cents.

For fiscal 2021, Lululemon expects net revenue to be in the range of 5.550 billion dollars to 5.650 billion dollars. Diluted earnings per share are expected to be in the range of 6.10 dollars to 6.25 dollars for the year and adjusted earnings per share are expected to be in the range of 6.30 dollars to 6.45 dollars.

Image: Lululemon media