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The Key Drivers behind Lululemon’s Q1 Revenue Growth

Sirisha Bhogaraju - Author

Jun. 14 2019, Published 3:59 p.m. ET

Strong revenue growth

Lululemon (LULU) generated revenue of $782.32 million in the first quarter of fiscal 2019, which ended on May 5. The company’s first-quarter revenue came in way ahead of analysts’ expectation of $755.31 million, up grew 20.4% on a year-over-year basis.

The company’s top-line growth was driven by a revenue contribution of $44.3 million from stores that have been opened or expanded since fiscal 2018’s first quarter, same-store sales growth of 6%, and a 33% rise in direct-to-consumer (digital) revenue. The company’s first-quarter revenue also benefitted from a 12% rise in Other revenue due to more temporary locations opened during the quarter.

Lululemon’s women’s business continued to deliver robust growth, driven by strength in the bottoms category—mainly strong sales for leggings and jogger styles. Lululemon’s men’s business saw a 26% rise in comparable sales, driven by higher sales of both tops and bottoms.

In comparison, the revenue of rival Under Armour (UAA) grew 1.6% to $1.20 billion in the first quarter while Columbia Sportswear’s (COLM) revenue grew 7.8% to $654.61 million.

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Revised outlook

Lululemon now expects its full-year fiscal 2019 revenue in the range of $3.73 billion–$3.77 billion, compared to $3.29 billion in fiscal 2018. The company previously expected fiscal 2019 revenue in the range of $3.70 billion–$3.74 billion.

Lululemon already has a strong presence in women’s athletic apparel. The company is now looking for growth in its men’s business. It’s also strengthening its digital business and investing in its online capabilities. Lululemon’s digital business accounted for about 27% of its overall first-quarter revenue. The company aims to double its revenue from its men’s and digital businesses over the next five years.

Lululemon is also capturing growth prospects in international markets, and it aims to grow its international revenue by 4x over the next five years.


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