Lululemon’s operating income increased by 191 percent in Q4 to $913.9 million from $314.4 million for the period ended Dec. 31. Final period net income came in at $669.5 million, and gross margins increased by 430 basis points year-over-year to 59.4 percent. Revenues rose by 16 percent to $3.2 billion from $2.77 billion with Americas’ sales up 9 percent, China Mainland sales increasing 78 percent; and Rest of World sales jumping by 36 percent. Own store sales, meanwhile, increased by 15 percent, with comparable store sales rising by 6 percent. The group ended the FY with 711 stores worldwide. By merchandise category, women’s rose by 13 percent; men’s grew by 15 percent; and accessories increased by 40 percent.
Lululemon senior executives told analysts about a “somewhat challenging” consumer environment in the US during Q1 but also pointed out that the group expects its international business to represent approximately half of its overall revenues eventually, up from 21 percent currently. In 2024, the group intends to open 30 stores outside of North America and continue with strategies aimed at increasing brand awareness, which stands at 14 percent unaided in China and 31 percent in the US.
As for FY23 results, operating income was $2.1 billion against $1.32 billion on 18.6 percent revenue growth to more than $9.6 billion from $8.11 billion in FY22. Net income expanded by 81 percent year-over-year to $1.55 billion as annual gross margin grew 290 basis points to 58.3 percent. Lululemon currently projects FY24 revenues to increase by 11-12 percent year-over-year to a range of $10.7-10.8 billion. There will be some reductions in discretionary spending, but investments in initiatives aimed at market expansion, increasing unaided guest awareness, and new guest acquisition will continue. The company intends to keep its marketing spend at 4.5-5 percent of revenues this year.
