Lululemon’s net income soars 41.5 per cent in third quarter

Lululemon Athletica’s net income increased in the fiscal third quarter, thanks to higher revenue amid the opening of new stores.

The athletic wear brand’s net income soared 41.5 per cent year-on-year to US$351.9 million as revenue jumped 8.7 per cent to $2.4 billion.

“With the majority of the fourth quarter still in front of us, we are focused on deepening engagement with our guests and bringing new consumers into the brand,” said Meghan Frank, Lululemon CFO.

“We are committed to delivering on our Power of Three ×2 revenue target of $12.5 billion in 2026 and look forward to all that lies ahead.”

International revenue soared 33 per cent for the Canadian-headquartered brand, while Americas revenue rose by a more modest 2 per cent.

Lululemon forecasts revenue of $3.475 billion to $3.510 billion for the fiscal fourth quarter and $10.452 billion to $10.487 billion for the fiscal year.

Neil Saunders, MD at GlobalData, described the quarter as “very solid” for the business, especially given the context that the quarter was not strong for the apparel industry in general.

He said the results deliver “a dose of relief” in that the deceleration in growth that took hold over the past three quarters has now been reversed.

“Some of the swing back from a weaker second quarter is due to corrections made to the women’s assortment. In the last period this fell flat as it lacked sufficient newness. Sizing options were also off, which resulted in missed purchases.

“From our channel checks, we believe that these issues have largely been corrected. Across the third quarter, the women’s range felt fresh and interesting, and there was more than enough to grab the attention of shoppers. This both improved the conversion rate and helped with average basket sizes. In our view, Lululemon deserves praise for the quick course correction which underlines that it is a merchant-led organization.”

The company ended the period with 749 stores after adding 28 new company-operated stores, including 14 stores from taking over the franchised locations in Mexico.

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