Tracking Lululemon’s online performance in fiscal 1Q17
Lululemon Athletica’s (LULU) online sales (VCR) showed strong growth in fiscal 1Q17. Lululemon’s e-commerce sales rose by 16.7% to $97.6 million in the quarter, representing 19.7% of its revenue. The company has a newly designed website, which it launched in May.
Why LULU earns relatively more from e-commerce sales
Lululemon’s online sales as a percentage of total revenue are significantly higher than other players in the activewear space. This is partly due to the company’s policy of keeping inventory lean to ensure higher sell-through. The other factor is the customer’s ability to locate products online more easily.
LULU’s new shop app, and its customer relationship management and inventory tools, provide visibility of over 98% of its available merchandise.[1. Based on comments by Laurent Potdevin, CEO of Lululemon Athletica] This is likely to help the case for higher online sales going forward.
Activewear companies, digital, and e-commerce: A savvy blend
Nike (NKE) earned 3.9% of its revenue from the Web last year, reaching $1.2 billion in fiscal 2015. However, Nike’s growth rate for its online sales is more rapid, despite being larger. Nike’s online sales grew by 55% fiscal 2015.
Nike’s customization options, along with a thriving digital community of sports enthusiasts, allowed the company to grow its online sales at an exponential pace each quarter. These factors are also boosting the online presence of other players in the space, such as Under Armour (UA), Adidas (ADDYY), and Puma (PMMAF).
According to digital benchmarking site L2, Nike is the top athletic apparel brand in its 2016 Digital IQ Index. That’s followed by VF Corporation’s (VFC) The North Face, Under Armour (UA), and Adidas (ADDYY), all tied for second place.