Canadian Sports Brand Lululemon Expects To Double The Number Of Stores In China This Year.

Beijing time March 27th, Canadian sports brand Lululemon announced the fourth quarter of fiscal year 2019 and its annual performance report after the launch.

This is also a financial statement that exceeds analysts' expectations. Net income in the fourth quarter was US $1 billion 400 million, an increase of 20% over the same period last year. The total revenue in the 2019 fiscal year was 4 billion US dollars, unchanged at the same rate (the same below), an increase of 22% over the same period. Comparable sales increased by 18%, gross profit of $2 billion 200 million, an increase of 22% over the previous year, and gross margin of 55.9% increased by 70 basis points over the 2018 fiscal year. Diluted earnings per share were $4.93, and the figure in the last fiscal year was $3.61.

"2019 was a strong year for Lulu lemon," said Calvin McDonald, chief executive of Lululemon.

From the perspective of capital market, Lululemon has become a darling of the stock market in recent years, and has risen nearly 300% in the past five years. Lululemon's share price also hit a record high of $266.20 in February before the outbreak of the US stock market crash.

Since the stock price fell to 138.98 yuan in March 16th, the share price of Lululemon has also risen all the way. As of the end of March 26th, the stock price has recovered to $200.8 before the announcement of the earnings announcement, which has soared nearly 45% in 10 days.

Specifically to the business level, in the fourth quarter's revenue, the female business grew by 12%, the male business grew by 39%, and the accessories business grew 24%.

From the perspective of channels, physical stores grew by 9%, and digital channels grew by 41%. In the fourth quarter, the electricity supplier contributed about $464 million to Lululemon, accounting for 33% of the total revenue.

From a regional perspective, North America grew by 19% and international growth by 25%, of which Lululemon pointed out that China's growth rate was 70%. In the past year, Lululemon has increased by 51 stores, pushing store area up by 18% over the same period, and now there are 491 stores.

In April 2019, they announced the five year plan, and put forward a Power of Three Growth Strategy: product innovation (Product innovation), customer experience (Omni guest experiences) and market expansion (Market Market). Three It is expected that in the next five years, men's clothing and digital income will quadruple, and international income will turn four times.

Lazy bear was also analyzed in September last year when Lululemon announced the second quarter report in 2019. After standing firmly in yoga class, lululemon proved itself on two major issues of cross category and cross region, which led to a qualitative leap in share price. This financial performance also seems to show that Lululemon has done a good job in implementing the strategy.

But looking closer, we will find that Lululemon is still not a mature cross sex and trans regional sports brand. The annual report shows that although the proportion of international income has increased, from 9.3% in fiscal year 2017 to 12% in fiscal 2019, it still can not compare with the US's 71.7% and Canada's 16.3%. In terms of gender, the proportion of men increased from 19.9% in fiscal 2017 to 23.5% in fiscal 2019, but it is still quite different from that in women.

Affected by the epidemic, the annual report Lululemon did not announce its performance guidelines for 2020. In February, they closed all retail outlets in mainland China. At present, except for Wuhan, other businesses have been resumed.

However, with the global development of the epidemic, Lululemon closed all stores in North America, Europe, Malaysia and New Zealand in March. In the conference call after the earnings announcement, analysts also kept asking Lululemon's return to work in China, which was very concerned about the epidemic. It is worth mentioning that Calvin McDonald said that the number of stores in China is expected to double this year.

Calvin McDonald is more relaxed. His strength first came from the end of fiscal year 2019. Lululemon had 1 billion 100 million dollars in cash and cash equivalents, no long-term debt, and a $400 million revolving credit facility, which had sufficient cash flow. In addition, Calvin McDonald believes that Lululemon's products are not very seasonality, and they have relatively secure channels including multi-channel sales system, including e-commerce.

However, it is worth noting that Lululemon's inventory increased by 28% to $518 million 500 thousand at the end of fiscal year 2019, and the inventory at the end of fiscal 2018 was $404 million 800 thousand. Calvin McDonald also said that because they did not want to damage the brand image, they did not intend to take any special methods to inventory in the short term during the epidemic. They would still take steps to reduce prices and reduce prices online.

But as mentioned earlier, North America is still the main market of Lululemon. Secondly, from the perspective of total revenue, although the proportion of direct consumers has risen from 26.1% to 28.6%, the proportion of physical stores is still 62.9%. North America and entities occupy a big business, which is not good news for Lululemon to face the epidemic.

What Lululemon is doing now is to continue building its own community atmosphere during the epidemic. An online sports content platform has been constructed through the online community named Carries on, including the participation of sports ambassadors in video courses, participation in community activities of Facebook and Instgram, and watching video courses on Youtube. In China, they have broadcast live courses on WeChat, and have worked with Gym brand SPACE. At present, there are more than 7000 subscribers.

It is worth mentioning that Calvin McDonald recently announced on twitter that Lululemon will use US $2 million as the global ambassador relief fund to help sports ambassadors with fitness workshops to maintain operations under the epidemic.