Lululemon’s latest financial report reveals a significant driver for its Q3 2024 success: strong international sales.
The Vancouver-based activewear company experienced a substantial 33% increase in its international revenue, far outpacing the modest 2% growth in the Americas. This surge was primarily fueled by exceptional performance in China, where net revenue soared 39% year-over-year, and comparable sales jumped by 27%. China contributed $318.3 million to the international revenue, up from $228.6 million last year.
Outside of China, Lululemon saw a 27% rise in net revenue across its international markets, with comparable sales also climbing 23%. The brand’s global presence has expanded to 749 locations, up from 686 in the previous year, including six new stores in mainland China.
CEO Calvin McDonald expressed optimism during an earnings call, emphasizing strong global momentum and acceptance of the brand. He highlighted that the company’s alignment with the “Healthy China 2030” initiative has resonated well with Chinese consumers. This alignment has been pivotal as Chinese citizens increasingly embrace health and wellness trends similar to those in North America.
While international sales flourished, the brand’s performance in the Americas was less impressive. The region’s net revenue inched up by just 2% to $1.8 billion, and comparable sales dipped by 2%, continuing a pattern of flat growth.
Looking ahead, Lululemon plans to expand further by opening 40 new stores in 2024, including additional locations in China and new markets like Denmark, Belgium, Turkey, and the Czech Republic through its franchise model. However, specific details regarding the number of new stores in China remain unconfirmed.
Martin Roll, a global business strategist, attributes Lululemon’s success in China to the growing consumer focus on health amidst challenging economic conditions. Roll notes that Chinese consumers are adopting health practices such as yoga and gym routines, paralleling trends seen in North America over the past twenty years.
Following the earnings announcement, Lululemon’s stock rose 9% in after-hours trading, despite a year-to-date decline of over 30%.
Lululemon’s robust international sales, particularly in China, have been instrumental in offsetting slower growth in the Americas, positioning the company for further global expansion.
Source: Businessinsider
