Lululemon reports strong Q2, expects to double revenues by 2026

Lululemon Athletica Inc. net revenue increased 18 percent or 20 percent on a constant dollar basis to 2.2 billion dollars.

The company's Power of Three ×2 growth plan calls for a doubling of the business from 2021 net revenue of 6.25 billion dollars to 12.5 billion dollars by 2026.

The company said in a statement that key pillars of the plan are product innovation, guest experience, and market expansion and the growth strategy includes a plan to double men's, double direct to consumer, and quadruple international net revenue relative to 2021.

Commenting on the results, Calvin McDonald, the company’s chief executive officer, stated: "Our Q2 results highlight the ongoing strength of the business amid a dynamic operating environment. Our continued ability to gain market share and bring new customers into the brand illustrates the significant runway ahead for lululemon."

Highlights of Lululemon’s Q2

Net revenue increased 11 percent in North America and 52 percent internationally, while comparable sales increased 11 percent or 13 percent on a constant dollar basis.

Comparable store sales for the quarter increased 7 percent or 9 percent on a constant dollar basis and direct to consumer net revenue increased 15 percent or 17 percent on a constant dollar basis.

Gross profit increased 23 percent to 1.3 billion dollars and gross margin increased 230 basis points to 58.8 percent. Diluted earnings per share were 2.68 dollars compared to 2.26 dollars in the second quarter of 2022 and adjusted diluted earnings per share were 2.20 dollars.

The company opened 10 net new company-operated stores during the second quarter, ending with 672 stores.

Lululemon forecasts 17 to 18 percent revenue growth for FY23

For the third quarter of 2023, the company expects net revenue to be in the range of 2.165 billion dollars to 2.190 billion dollars, representing growth of 17 percent to 18 percent.

Diluted earnings per share are expected to be in the range of 2.23 dollars to 2.28 dollars for the quarter.

For 2023, the company expects net revenue to be in the range of 9.510 billion dollars to 9.570 billion dollars, representing growth of 17 percent to 18 percent.

Diluted earnings per share are expected to be in the range of 12.02 dollars to 12.17 dollars for the year.