Lululemon posts sharp drop in sales
Store closures due to coronavirus more than offset e-commerce gains at maker of pricey yoga pants
Lululemon Athletica Inc.’s sales fell sharply in the last quarter as U.S. and European stores were closed amid the coronavirus pandemic and as surging online sales weren’t enough to offset the decline.
The activewear maker known for pricey yoga pants said 295 of its roughly 490 stores around the world have now reopened. About half of North American stores are open; the company expects all stores globally will be open by the end of June.
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Sales suffered due to the closures, and net revenue fell 17% to $652 million for the quarter ended May 3.
The company’s online business surged by 70% in the period, accounting for 54% of overall sales compared with 27% in the year-ago quarter.
Lululemon Chief Executive Calvin McDonald said he expects the share of sales from e-commerce to remain permanently higher. It is too soon to gauge the impact of that shift on the company’s bricks-and-mortar strategy, he said in a call with analysts.
The company has been opening new locations, including some so-called experiential stores that offer a broad array of products, yoga classes and eateries.
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“These are very difficult times to evaluate the value of our retail fleet and to make dramatic changes to a strategy,” Mr. McDonald said, adding that he sees physical stores continuing to be central to the company.
Operating income fell 75% from a year ago to $32.8 million. The company said it doesn’t expect earnings growth to return until the fourth quarter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LULU | LULULEMON ATHLETICA INC. | 315.14 | +6.83 | +2.22% |
The company said it won’t provide financial guidance for the current year because of the uncertain economic climate.
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Lululemon’s share price, which plunged in the pandemic’s early days along with other retail stocks, has more than doubled since mid-March. The S&P 500 is up 26% for the same period.
Write to Sharon Terlep at sharon.terlep@wsj.com