Impressive revenue growth
Lululemon’s (LULU) 20.8% revenue grew to $747.7 million in the third quarter of fiscal 2018, which ended on October 28. Analysts were expecting revenue of $737.5 million. The athletic apparel maker delivered impressive overall comparable sales (including e-commerce sales) growth of 17%, which was way ahead of analysts’ estimate of 13.7%.
Growth across all channels
The company’s top-line growth was driven by revenue growth of 12.2% from the company-operated stores to $476.9 million and a 44.4% rise in the company’s direct-to-consumer net revenue to $189.4 million. Currency headwinds had an adverse impact of $9.3 million on the third-quarter top line.
The growth in the revenue of the company-operated stores was a result of same-store sales growth of 6% and a contribution of $41.3 million from new and expanded stores. The closure of 48 Ivivva branded stores as part of restructuring efforts had a $6.2 million adverse impact on the third-quarter revenue from company-operated stores.
Lululemon’s e-commerce revenue or direct to consumer revenue grew 44.4% as a result of higher website traffic and improved conversion rates. Lululemon’s Other revenue rose 30% to $81.4 million driven by a higher number of temporary locations.
For the fourth quarter, which includes the crucial holiday season, Lululemon expects its net revenue in the range of $1.115 billion–$1.125 billion compared to $928.8 million in the fiscal 2017 fourth quarter. The company expects its overall comparable sales to increase in the high-single to low-double digits range on a constant dollar basis in the fourth quarter. Analysts now expect the company’s revenue to grow 21.3% to $1.13 billion in the fourth quarter.
Lululemon expects its fiscal 2018 net revenue in the $3.235 billion–$3.245 billion range. The company previously expected revenue to come in between $3.185 billion–$3.235 billion. Lululemon expects fiscal 2018 comparable sales growth in the mid-teens.
We’ll discuss Lululemon’s margins in the next part of this series.