Earnings   //   December 8, 2022

Despite an industry slowdown, Lululemon’s business is still growing

Lululemon’s winning streak continues, with the company continuing to grow sales while other apparel retailers experience slowdowns.

For the third quarter of 2022, revenue jumped 28% over the same period last year, to $1.9 billion. Comparable store sales increased 14% year-over-year. The company’s gross profit increased 25%, to $1 billion year-over-year. The company also expects the holiday season to generate strong sales, forecasting a fourth quarter revenue between $2.605 billion to $2.655 billion.

“We are proud to have delivered another quarter of strong sales and earnings growth, despite an operating environment that remains dynamic,” Chief Financial Officer Meghan Frank said in the earnings release. “These results illustrate the strength and differentiation of our omni operating model and position us well to deliver ongoing value for our stakeholders. We look forward to a strong finish to our fiscal year.”

This series of double-digit growth over the past few quarters shows that Lululemon may be an anomaly within the athleisure industry. It’s been a rough fall for athletic brands, with brands like Adidas and Nike slashing profit outlooks or liquidating excess inventory. 

Sneha Pandey, insights manager at web analytics firm Similarweb, said Lululemon’s direct-to-consumer traffic has been leading the category. “Lululemon is dominating the athleisure market, converting more users than some of the industry’s biggest names, and, most recently, outperforming in the Black Friday sales season,” Pandey said. She also pointed to Similarweb data that shows Lululemon’s website saw nearly 26 million visits during November, up 41% from November 2021. Meanwhile, checkout traffic increased by 34% compared over November 2021.

“The famously full-price [Lululemon] has been creatively combating its excess inventory problems with a ‘We Made Too Much’ sales section, contributing to its early holiday shopping success,” Pandey explained. also benefited from some viral moments during the fall, including its belt bag going viral on TikTok in September — leading to it being sold out everywhere.

Similar to past quarters, Pandey noted that Lululemon’s expansion into other categories like footwear and men’s products are showing promise. “Our data shows men’s category traffic increased by 24% this November compared to last year, while its newer footwear category traffic grew by 57% from October to November of this year,” she concluded.

Online sales continue to be a big driver of Lululemon’s growth, with DTC revenue now representing 41% of Lululemon’s total net revenue, compared to 40% in the third quarter of 2021.

In the fourth quarter, Lululemon is forecasting net revenue to be between $2.61 billion and $2.66 billion.