• Lululemon Q1 earnings reached $75.1m from $31.2m a year earlier.
  • Gross margin increased 370 basis points to 53.1%.
  • "Online was the star of the show," said Neil Saunders, managing director of GlobalData Retail. "Much of this is down to the relaunched website."
Lululemon had a "stellar" first-quarter

Lululemon had a "stellar" first-quarter

Product innovation, global growth and digital acceleration all helped Canadian yogawear retailer Lululemon Athletica deliver a strong first-quarter, with growth that surpassed even last quarter's high benchmark.

For the three months ended 29 April, earnings reached $75.1m from $31.2m a year earlier. Gross margin increased 270 basis points to 53.1%.

Net revenues were up 25% on last year to $649.7m, and on a constant dollar basis were up 23%. Total comparable sales increased 20%, while comparable store sales grew 8%. Direct-to-consumer sales jumped 62%.

"Online was the star of the show," said Neil Saunders, managing director of analyst GlobalData Retail. "Much of this is down to the relaunched website, which is functionally better and far more engaging than the previous incarnation. Enhanced product images, more storytelling, and more content have helped create a much more stimulating experience. In short, Lululemon has created a much better online showcase, which is delivering sales."

For the second quarter, the company is forecasting net revenues in the range of $660m to $665m based on a total comparable sales increase in the high single digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $0.46 to $0.48.

COO Stuart Haselden said the results reflect the ongoing strength of the Lululemon business and the company's continued focus on product innovation, global growth, digital acceleration and investing in our people. "Our momentum remains strong and we are optimistic for 2018 and beyond."

Saunders added: "Despite these strong numbers, Lululemon still has a lot of untapped potential it can use to drive future results. These include international expansion and further penetration into menswear, where it has had much success but remains below-the-radar for many shoppers. It also has opportunities among younger consumers and as the latest marketing has shown, it can capture the imagination and spend of this group with relative ease."