Lululemon Athletica has reported a «solid start» to the third quarter as its North American business improves, leading the yoga wear maker to revise its annual profit and revenue forecasts upward for a second time. In the second quarter, Lululemon experienced significant growth in North America, with a notable 11% increase in sales. This expansion was driven by increased purchases of workout gear and crossbody bags by its affluent customer base. Additionally, the company gained market share in the United States during this period.
Sales in China, which represented approximately 12% of overall revenue, also experienced substantial growth, with a 61% increase due to resilient demand following the easing of pandemic restrictions. However, these growth rates did slow compared to the first quarter, reflecting increasing global economic uncertainty.
Lululemon continues to observe consistent customer behavior, with individuals adhering to their pandemic shopping habits, including purchasing comfortable clothing items such as Dance Studio joggers and running shorts, as well as accessories like backpacks and small pouches.
To attract more customers, Lululemon has introduced innovative products, including «road-to-trail» running shoes, introduced new colors in its sports apparel, and expanded its tennis and golf collections. These efforts, combined with strong demand for core products and newer items, have allowed the company to maintain high margins without resorting to heavy discounting.
Lululemon’s gross margins increased by 230 basis points to 58.8% in the second quarter. The company is raising its annual forecast, anticipating full-year 2023 revenue to be between $9.51 billion and $9.57 billion, up from the previous estimate of $9.44 billion to $9.51 billion. It also expects annual profit to be between $12.02 and $12.17 per share, compared to the earlier forecast of $11.74 to $11.94 per share.
This positive outlook comes as some apparel makers, including Nike, adopt a cautious stance toward the second half of the year due to a weakening consumer spending environment.