Lululemon yesterday reported its holiday earnings that exceeded expectations, but the athleisure and activewear giant’s growth in North America is stagnating. Head below to learn more.
Lululemon had the biggest slump it’s experienced since the beginning of the COVID-19 pandemic, reporting a slowdown in US business and much lower than expected outlooks for the first quarter. The company’s stock shares fell as much as 15% on Friday, the biggest decline since March 2020. This year, lululemon’s stock has fallen 6.3% through yesterday’s market close, compared to a 9.9% gain for the S&P 500 index.
Chief executive officer Calvin McDonald told analysts during a call on Thursday that American consumers “are a little soft coming into the year,” and that people are buying slightly less than the previous year.
Lululemon’s reported net income for the three-month period of time that ended on January 28 was $669.5 million – $5.29 per share – in comparison with $119.8 million – 94 cents per share – a year earlier (via CNBC). Lululemonn’s sales rose to $3.21 billion, which is up approximately 16% from $2.77 billion last year.
As for the cause of the 11% drop in shares reported on Thursday, lululemon has been experiencing a slowdown in spending that has come for the apparel space more than others. During the quarter, company sales roles 9% in the Americas, compared to a growth of 29% in the year-ago period – even though lululemon continues to grow in the region, the rate has slowed significantly as the company focuses energy on international expansion. Calvin McDonald:
We view this as an opportunity to keep playing offense as we lean into investments that will continue our growth trajectory. Outside the U.S., our business remains strong, and all our international markets in Canada.
McDonald went on to say that in the US, traffic and conversions are down, and he attributed that to a lack of lululemon products in sizes 0-4 in addition to a lack of colorful items available.
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While lululemon is still far and wide the dominant company within the activewear and athleisure space, they are seeing some competition among companies like prAna, Vuori, Alo Yoga, and more, and as a result, are having to work that much harder to set themselves apart. They have introduced new items in its lineup such as men’s shoes, and will continue to work on growing business internationally.
More on lululemon:
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- Lululemon hires fossil fuel-linked PR firm in the face of greenwashing allegations
- Lululemon flexes its tech muscles, experiments with generative AI
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