Lululemon Keeps Eye On New Store Opportunities As DTC Revenue Grows 55%
While Lululemon's digital investments continue to pay off as it adjusts to its new post-pandemic future. the company intends to keep stores a key component of its go-forward strategy.
The apparel retailer reported total net revenue of $1.2 billion in the first quarter, an increase of 88%. North America net revenue grew 82% while its international business increased 125%.
E-commerce represented 44% of total revenue ($545 million) with traffic driven by both new and existing consumers. Broken out, Lululemon’s direct-to-consumer net revenue grew 55% to $545.1 million during the quarter, representing 44.4% of total net revenue.
And while the company has done well with its digital growth, it will continue to invest in physical retail by building more stores this year and being “opportunistic” in securing real estate locations in cities worldwide, said CEO Calvin McDonald.
The retailer opened two net new stores this quarter and remains “very confident in our store business, in its performance, in its contribution and the role it plays of connecting the brand, guest acquisition and driving productivity numbers,” he noted.
The company also provided additional insight into the performance of its in-home fitness platform MIRROR, citing a strong Mother’s Day. MIRROR, which the company acquired in 2020, is on track to deliver $250 million to $275 million in revenue this year, and it will expand to become available in nearly 90 Lululemon store locations this month. The company expects to have 200 MIRROR shop-in-shops by the holiday season.
Each Lululemon store now has dedicated MIRROR associates, and the company will continue to add new features and more live classes. It’s also planning to expand into Canada later this year.
The retailer has seen an overlap of both new and existing Lululemon consumers purchasing MIRROR, McDonald said. “That’s where we get excited as we as we build out the synergies of having a lululemon guest buy into a MIRROR and have the MIRROR guest buy into Lululemon as their sweat solutions.”
“There is really a versatility in who’s buying it and how they are using it,” he added. “And the fundamental opportunity is unlocking these synergies, which we’re just getting started as we’re able to tap into the stores now that we’re emerging out of the pandemic and drive the awareness for the product.”
The performance of its Lululemon Like New re-commerce program, meanwhile, which is currently operating in California and Texas after a pilot, was described by McDonald as “encouraging.” With Like New, consumers can exchange gently used Lululemon apparel for gift cards in stores or by mail. In return, the company directly reinvests profits to support a range of sustainability initiatives.
