Lululemon outlook exceeds expectations in FY22 with 30% sales growth

Lululemon Athletica has today announced financial results for the fourth quarter and full year in 2022, revealing total comparable sales increased 27% in Q4, with comparable store sales also increasing 15%.

In Q4, net revenue increased 30% to £2.27 billion ($2.8 billion), with net revenue increasing 29% in North America and 35% internationally.

Direct to consumer net revenue increased 37%, representing 52% of total net revenue compared to 49% for the fourth quarter of 2021. Operating margin decreased to 11.3% from 27.7% in the fourth quarter of 2021.

The company opened 32 net new company-operated stores during the quarter, ending the year with 655 stores globally.

Looking at the 2022 financial year, net revenue increased 30% to £6.58 ($8.1 billion). Net revenue increased 29% in North America and increased 35% internationally.

Lululemon previously said it expected annual net revenue to be in the range of £6.45 billion ($7.944 billion) to £6.49 billion ($7.994 billion), representing a three-year compound annual growth rate of approximately 26%.

Total comparable sales increased 25%, or 28% on a constant dollar basis. Comparable store sales increased 16%, or 19% on a constant dollar basis. Direct to consumer net revenue increased 33%, representing 46% of total net revenue (compared to 44% in 2021).

The company ended 2022 with £970 million ($1.2 billion) in cash and cash equivalents compared to £1.06 billion ($1.3 billion) at the end of 2021.

Inventories at the end of 2022 increased by 50% to £1.14 billion ($1.4 billion) compared to £784.7 million ($966.5 million) at the end of 2021. This is inclusive of a £51 million ($62.9 million) provision against inventory related to lululemon Studio, which the company said reduced the inventory growth rate by 7%.

Calvin McDonald, Chief Executive Officer: "In the fourth quarter and full year 2022, we delivered strong results across the business driven by our innovative products, powerful guest experiences, and strategic market expansion. Our continued high level of performance is a reflection of the hard work and agility of our incredible teams and the deep connections they create with our guests and communities around the world. As we enter 2023, we look forward to another year of strong momentum across the globe and delivering on our Power of Three ×2 growth plan."

Meghan Frank, Chief Financial Officer, added: "We are pleased with our performance in the fourth quarter, which remained balanced across product category, channel, and regions. Our ability to exceed our annual revenue target in a dynamic operating environment is a testament to the enduring strength of the lululemon brand. Looking ahead, we remain optimistic regarding our ability to deliver sustained growth and long-term value for all our stakeholders."

For fiscal year 2023, Lululemon expects net revenue to be in the range of $9.3 billion to $9.41 billion, representing growth of approximately 15% year on year.