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Lululemon is in the 'early innings' of growth: CEO

Alexis Christoforous
·Anchor
·2 min read
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Lululemon (LULU) is one of the few retailers actually winning during the pandemic, as consumers shift to more casual clothing and a healthier lifestyle.

CEO Calvin McDonald told Yahoo Finance Live “it was a very, very positive holiday,” and the athletic apparel maker now expects earnings and sales for the fourth quarter to come in at the high end of its prior outlook. Lululemon is slated to report Q4 earnings on March 25.

The retailer has a tough act to follow after its blowout Q3 performance, when sales came in at $1.1 billion dollars led by a surge in online orders. Shares of Lululemon (LULU) are up more than 37% in the past 12 months.

“As stores reopened and we continued to operate through some of the operating constraints that we were faced with, overall, the business showed great momentum and that continued into Q4,” said McDonald.

While he didn’t offer a full-year outlook because of the uncertainty surrounding COVID-19, McDonald did say the company is in the “early innings” of growth.

In June 2020, Lululemon made its first-ever acquisition when it bought the at-home fitness equipment maker Mirror for $500 million. (Lululemon)
In June 2020, Lululemon made its first-ever acquisition when it bought the at-home fitness equipment maker Mirror for $500 million. (Lululemon)

During the holiday quarter, Lululemon started selling the $1,500 Mirror in 18 stores and on its website. It bought the at-home exercise equipment maker in June 2020 for $500 million in a bid to compete with the likes of cycle maker Peloton (PTON).

McDonald said the company continues to invest in the Mirror business and “we're just getting started with the synergies of bringing the two brands together.”

“When we initially purchased Mirror, we guided to $150 million in revenue on the year, up from $100 million, which we had previously communicated. Since then, we've provided commentary that we are going to come in, in excess to that number,” McDonald said.

As part of its previously announced five-year growth plan, Lululemon is also still on track to enter the footwear business with its own products.

“Our plan is to be selling early '22 with a late '21 introduction to the market,” McDonald said. He expects to start selling Lululemon shoes globally in the spring of 2022.

HONG KONG, CHINA - 2020/10/17: Canadian sportswear clothing band, Lululemon logo and store seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)
Canadian sportswear clothing brand, Lululemon logo and store seen in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

At a time when many retailers have filed for bankruptcy and closed their doors for good, Lululemon is committed to expanding its retail footprint. With 515 stores worldwide, the retailer plans to open 30-35 new locations this year.

“Our stores have remained healthy, even during COVID and they play such a unique role in our brand connection,” said McDonald. “We're going to continue with and evolve that strategy going forward.”

Alexis Christoforous is an anchor on Yahoo Finance. Follow her on Twitter @AlexisTVNews.

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