Lululemon reported a net revenue increase of 18% to $2.21bn in Q2 as opposed to $1.87bn in the same quarter last year and increased 20% on a constant dollar basis.
The Canadian athleisure retailer highlights that direct-to-consumer net revenue represented 40% of total net revenue compared to 42% for the second quarter of 2022.
Income from operations saw a 19% rise from $401.2m to $479.3m. While its net income increased from $289.5m to $341.6m.
Meghan Frank, chief financial officer at Lululemon, believes the ongoing momentum is a reflection of its portfolio approach to growth, differentiated business model, and innovative product assortment.
Frank adds: "Our performance remained strong in Q2 as both revenue and EPS exceeded our expectations. We are excited about our opportunities in the second half of the year and look forward to continue delivering on our Power of Three ×2 growth plan."
Lululemon's CEO Calvin McDonald is of the same opinion and says the Q2 results highlight the ongoing strength of the business amid a dynamic operating environment.
He continues: "I am proud of how our teams continue to deliver on our vision and offer an exciting pipeline of new products and experiences to our guests around the world. Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for Lululemon."
In addition to this, Lululemon explains the company's Power of Three x2 growth plan calls for a doubling of the business from 2021 net revenue of $6.25bn to $12.5bn by 2026.
The key pillars of the plan are product innovation, guest experience, and market expansion while the growth strategy includes a plan to double men's, double direct to consumer, and quadruple international net revenue relative to 2021.
Lululemon is resilient despite macroeconomic headwinds
GlobalData analyst Neil Saunders points out other retailers have collapsed into child’s pose with the stress and strains of the trading environment. But, he says Lululemon is still in a "handstand scorpion pose" and isn’t really breaking a sweat.
He explains that while growth at Lululemon continues to come down from its high point, the company is still performing way better than both others in its space and than the retail market in general.
Saunders says: "Sales in overseas markets, which surged by 52%, have helped to boost the overall numbers. While outstanding, such growth is relatively easy to attain as Lululemon has a more embryonic presence outside of the Americas and so can quickly grow as it expands and takes share from rivals. The reopening of China has also boosted international numbers."
In fact, he adds that, unlike many luxury brands which have leaned heavily into international to make up for weak domestic sales, Lululemon is doing well at home as well as abroad.
He also attributes this to the fact Lululemon's customers are more insulated from economic pressures. Plus, the company is focused on a part of the market that is "growing and retains" the interest of consumers.
