Lululemon Athletica Inc. Aims to Quadruple International Revenue by 2026

2024-09-01

Lululemon Athletica Inc., a well-known athletic apparel brand, conducted its 2025 Q2 earnings call, which featured key participants including Howard Tubin, Calvin McDonald, and Meghan Frank. The call commenced with a precautionary statement from Tubin regarding forward-looking statements and associated risks, directing investors to access the press release and quarterly report on Form 10-Q on the company's website.

During the call, Calvin McDonald reviewed the company's performance in Q2, emphasizing a 7-8% increase in total revenue and growth in merchandise categories such as women's (6%), men's (11%), and accessories (7%). The 18% surge in earnings per share was credited to a robust gross margin. Additionally, Lululemon repurchased $584 million of stock in Q2, reflecting a high level of confidence in the business.

The company set a goal to quadruple international revenue by 2026, with Q2 demonstrating a 29-31% surge in international revenue, particularly in China Mainland and Rest of World. Challenges in the women's assortment were acknowledged, with strategies outlined to enhance newness and leverage fast track design capabilities.

Successful products like lounge offerings, the Wunder Under franchise, and the Breathe Through fabric were underscored during the call. Lululemon actively engages customers through exclusive experiences, partnerships, and collaborations with elite athletes. Revenue growth expectations for Q3 and the full year, excluding the 53rd week, were set at 6-7%, with a target to double revenue by 2026.

The financials for Q2 showcased positive trends, with the gross profit rate standing at 59.6% of net revenue. SG&A expenses accounted for 36.8% of net revenue, and operating income represented 22.8% of net revenue. The effective tax rate was 29.6%, resulting in a net income of $393 million.

Looking forward, Lululemon outlined plans to enhance newness, strike a balance between design and merchandising, introduce new products, and boost brand awareness. With a strong emphasis on innovation, customer engagement, and strategic growth, the company aims to solidify its position as a leading athletic apparel brand in the market.