Interface News Reporter | Qin Siyue
Canadian sports equipment company Lululemon released its Q3 2024 financial report in early December. According to the financial report, Lululemon's third quarter revenue increased by 9% year-on-year to $2.4 billion.
Lululemon CEO Calvin McDonald said, "We are satisfied with the results we have achieved so far, and looking ahead, we will continue to focus on enhancing the brand's global visibility and promoting accelerated growth in the US market
Looking at different regions, the mainland Chinese market remains a powerful engine driving Lululemon's growth. In the third quarter, the net revenue of business in Chinese Mainland increased by 39% year on year, driving the net revenue of international business to increase by 33%. Calvin McDonald praised the performance of the Chinese Mainland market by name in the financial report teleconference: "The 'feeling first' brand proposition helped us establish a sincere connection with the vast number of Chinese consumers with innovative products and breakthrough activity experience. We supported our customers to live a healthy and active life through our products, and responded to the call of 'Healthy China 2030'."
Compared to the mainland Chinese market, the performance of the American market is not as outstanding: net revenue only slightly increased by 2% this quarter, while comparable sales decreased by 2% year-on-year. Lululemon believes that the sluggish sales growth in this market is due to the reduced supply of small-sized women's clothing products and slower pace of style and color updates.
The competition in the yoga market has been intensifying. In the American market, Alo Yoga and Vuori have rapidly expanded and become strong competitors to Canadian brands; In the Chinese market, domestic yoga brands represented by Maia Active and featuring "lululemon" are rising.
Taking Alo Yoga, founded in 2007, as an example. Its founder revealed that Alo Yoga achieved triple digit growth for three consecutive years from 2020 to 2022, and its annual revenue exceeded $1 billion in 2022. According to Alo Yoga's latest development plan, it is expected that by the end of 2024, Alo Yoga will have 100 stores.
What makes Lululemon even more nervous is that Alo Yoga is catching up with Lululemon in terms of volume, and even the adjustment of product strategy is almost consistent with Canadian brands. In March 2022, Lululemon announced the launch of its first women's shoe collection, officially entering the footwear market. In 2023, Alo Yoga followed suit and launched the brand's first footwear product, ALO × O1 Classic.
From a pricing perspective, the official selling price of ALO × O1 Classic in the United States is $180 (approximately RMB 1301), which is not much different from the initial price of Lululemon's first sports shoe Blissfeel, which was $1180, and both belong to the high-end sports shoe price range. In terms of functionality, both brands continue the style of clothing products, emphasizing the comfort of footwear products.
In order to cope with the huge competitive pressure in the yoga market, lululemon has continuously adjusted its product strategy in the past two years.
According to Lululemon's latest growth strategy Power of Three × 2, the brand plans to double its revenue to $12.5 billion by 2026 compared to 2021. At that time, the number of stores in Chinese Mainland will reach 220, and the Chinese market will become the second largest market of lululemon in the world. In the new development cycle, the women's business, store channels, and North American business remain the foundation of the brand. At the same time, new plans have been proposed to double the revenue of men's businesses, double the revenue of digital businesses, and achieve a fourfold increase in revenue in international markets, including the Chinese market.
Lululemon has been focusing on increasing its men's clothing product line since last year. In early December 2023, Lululemon unveiled its first men's pop-up space in China at Shanghai Hongqiao Tiandi, showcasing its autumn and winter running, training, and daily styling series products. At the end of January 2024, lululemon China's first independent men's clothing store opened in Yidi Port, Beijing, marking the brand's first independent men's clothing store in the Asia Pacific region.
Lululemon is also a men's brand and needs to get more men to know about it, "Calvin McDonald said.
For the fourth quarter of fiscal year 2024, lululemon expects net revenue to be between $3.475 billion and $3.51 billion, an increase of approximately 8% to 10%; If excluding the 53rd week of 2024, the growth rate is approximately 3% to 4%. For the fiscal year 2024, Lululemon expects net revenue to be between $10.452 billion and $10.487 billion, an increase of approximately 9%; If excluding the 53rd week of 2024, the growth rate is about 7%.