Author | Yesterday
Data support | Pythagorean Big Data (www.gogudata.com)
Key Highlights:
1. Thanks to the strong consumer demand for sports and leisure products such as casual pants and sports underwear, q2 revenue and net profit increased twice, and net profit soared by nearly 140%;
2. The growth of sales means that Lulu has overcome the challenges of the epidemic, and due to the recovery of physical retail stores in the late stage of the epidemic, the offline direct store channel has gradually picked up, the q2 offline business has grown rapidly, and the online dtc e-commerce revenue has also maintained a growth trend;
3, North America is still the most important source of revenue for Lulu, the holiday season is coming, and the revenue is expected to grow further;
4, Lulu attaches great importance to the development of the Chinese market, in ten quarters, lulu in China stores doubled, the company plans to quadruple its international business on the basis of 2018;
5, women are still the main force of lulu consumption, and the growth rate of male product revenue is amazing, this year's male product revenue is expected to double, but the competition with Nike and other full category brands will determine its future development;
6, Lulu is still facing supply chain constraints, the backlog of cargo containers in the port and the shortage of truck drivers and other challenges, making the entire industry retail inventory gap.
lululemon is a high-end yoga sports brand, known as "Hermès in yoga clothes". Founded in 1998 in Vancouver, Canada, the company is committed to providing consumers (mainly for women) with a variety of clothing including gym pants, shorts, sports underwear, etc. Unique in technical fabrics and functional design, lulu's products are inspired by yoga to provide customers with healthy, comfortable and stylish products, and to collaborate with yogis and athletes in the local community for ongoing research and product feedback.
Lululemon's market capitalization reached a new high, and as of Thursday's close, the total market capitalization reached $54.614 billion, ranking fourth among global sportswear brands, behind Nike with a market capitalization of $258.583 billion, Adidas with a market value of $68.7452 billion and ANTA Sports with a market value of $56.528 billion. As of the close of trading on September 9, 211, Lulu was up 20.88% for the year, which was tied with the S&P 500 (spy: 20.88%) in the same period, outperforming the gains of Nike (nke: 16.12%) and Addydas (addyy: -2.71%) in the same period, and outperforming the gains of Anta (anpdy: 34.59%) in the same period.
The opportunities and challenges behind revenue growth
Thanks to strong consumer demand for casual pants, sports underwear and other sports and leisure products, q2 revenue and net profit increased both, and net profit soared by nearly 140%. After hours on Wednesday, September 8, Eastern Time, Canadian sportswear brand Lululemon (lulu.us) released its 21-year Q2 financial report. Driven by strong consumer demand for athleisure products such as casual pants and sports underwear, q2's net revenue rose 60.7% year-over-year to $1.451 billion, well above expectations of $1.34 billion; gross profit increased 72.2% year-over-year to $843 million; gross margin increased 390 basis points to 58.1%, net profit increased 139.7% year-over-year to $208 million; and diluted earnings per share were $1.59, better than expected at $1.19, compared to $0.66 in the same period last year.
Lulu's main sales channels are 534 offline direct stores distributed in 17 countries and "direct-to-consumer" (DTC) e-commerce channels (including official websites, mobile apps, e-commerce platforms, etc.).
The increase in sales means that Lulu has overcome the challenges of the epidemic, and due to the recovery of physical retail stores in the late stage of the epidemic, the channel of offline direct stores has gradually picked up, the q2 offline business has grown rapidly, and the online dtc e-commerce revenue has also maintained a growth trend. q2 company's self-operated stores net revenue increased 142% year-on-year fy20q2 to $695 million, fy19q2 also increased by 19.1% year-on-year, accounting for 47.9% of total net revenue, compared with 31.8% in the same period last year; direct-to-consumer (DTC, mainly e-commerce channel sales) net revenue growth slowed down, up 8% year-on-year fy20q2 to $597 million, up 174.5% year-on-year, accounting for 41.2% of total net revenue, In the same period last year, it was 61.4%. Since the epidemic, many consumers' shopping preferences have shifted to online e-commerce platforms, which has significantly increased the traffic of Lulu's websites and mobile apps. In the future, the company expects that the net revenue growth rate of dtc e-commerce channels will further slow down year-on-year, but its growth trend will not change.
North America is still lulu's main source of revenue, and the holiday season is approaching, and revenue is expected to grow further. By geography, net revenue in North America increased 63% year-over-year. Among them, q2 US regional revenue increased by 67.2% to US$996 million, just one step away from the US$1 billion mark, from the past situation, benefiting from the holiday season, q3, Q4 US revenue is expected to exceed 776 and 1.274 billion US dollars in the same period last year; Q2 Canada revenue increased by 46.6% year-on-year to 217 million US dollars. In addition, international (outside North America) net revenue increased 49.2% year-over-year to $238 million, surpassing Revenue in Canada for the second consecutive quarter.
Lulu attaches great importance to the development of the Chinese market, with the number of lulu stores in China doubling in ten quarters, and the company plans to quadruple its international business from 2018. In the past ten quarters, the number of lulu stores in China has increased by 103.2% from 31 in fy19Q1 to 63 in fy21q2, the fastest expansion rate of stores in all countries and regions. This also partly reflects Lulu's development towards its intended goal: to quadruple its international operations from 2018 levels. In addition, according to the National Bureau of Statistics of China, in the past 15-20 years in China, the scale of online shopping transactions has always remained above 10%, and China's mature e-commerce market and online shopping environment have enabled Lulu to maintain the growth of Chinese business through online channels.
Women are still the main consumer force of Lulu, and the growth rate of men's product revenue is amazing, and this year's male product revenue is expected to double, but competition with nike and other full-category brands will determine its future development. From the perspective of the revenue structure divided by gender, women are still the main consumer force of Lulu, accounting for more than 65% of total revenue in the past ten quarters, and fy21q2 increased by 49.7% year-on-year to $969 million. And Lulu has also gradually laid out male products, and the corresponding revenue has also gradually increased, from 21.8% of fy19q1 to 25% of fy21q2, especially in the past two quarters, the growth rate of male product revenue is amazing, 113.6% and 90.7% respectively. With the expansion of the men's business, lulu inevitably collides with nike, Adidas and other sportswear brands in all categories. Whether it can survive such a cruel blue ocean competition for men's business and tap new business opportunities will directly affect lulu's growth curve.
Looking ahead, the Company expects Q3 net revenue to be in the range of $1.4-1.43 billion for fiscal 21, between $1.28 and $1.33 for diluted earnings per diluted share, and between $1.33 and $1.38 for adjusted diluted earnings per share. Full-year net revenue is expected to be in the range of $6.19-6.26 billion in FY21 and is expected to exceed its 2023 revenue target by the end of the year; diluted earnings per share are expected to be in the range of $7.16-7.26.
Lulu is still facing challenges such as supply chain constraints, a backlog of cargo containers at ports and a shortage of truck drivers, leaving a gap in retail inventory across the industry. For example, about 33% of the inventory of Lulu is produced in Vietnam, but the supply chain was disrupted this quarter due to the epidemic and other reasons. However, the company also said that it is currently prioritizing the production of autumn models and is using more air freight means to alleviate the pressure, and it expects the temporarily closed factory in southern Vietnam to reopen later this month, which will also help the company's revenue growth.
In addition, starting September 27, 2021, Lulu will raise the minimum base wage for most of its stores and guest education center (GEC) employees in North America to $15-17 per hour, and will recruit more than 8,000 team members in North America to meet the North American holiday season, which is expected to drive the company's future performance growth.
Note: This article is original by the US stock research agency team, please indicate the source when reprinting, thank you!