Lululemon on Thursday beat earnings estimates, as net sales rose 21% from fiscal year 2017 to $747.7 million (higher than analysts' expectations). Comp sales increased 18%, above the 13.8% expected, and comprised of a same-store sales increase of 7% and an e-commerce sales increase of 46%.
The fitness apparel retailer also said in a press release that operating income was $135.9 million (18.2% of net revenue), compared to $85.6 million in the year-ago quarter. Net income totaled $94.4 million compared to $58.9 million a year prior.
Since Q3 2017, Lululemon opened a net of 38 new stores, 11 of which were opened during the Q3 period. The company expects to open 36 by the end of the year.
Despite a slight resurfacing of the retailer's work culture problems, in the form of a lawsuit filed against the former CEO by an investor, Calvin McDonald's second quarter at the helm proved a positive one.
Lululemon's strong push to lure more male customers to stores has been evident through the launch of several menswear lines, and according to a call with analysts on Thursday, it's been paying off. The company's COO Stuart Haselden said on the call that "men's continues to be an exciting growth story for us, posting some of our highest overall category increases. As we've mentioned previously, we are effectively ahead of schedule to reach our $1 billion sales goal for men's in 2020."
The company this past quarter launched a capsule collection in partnership with menswear retailer Mr Porter, which consisted of 18 styles. "Guest response has been strong, and we're excited to test new partnerships such as this to continue to drive awareness for our men's business," he added.
The company also called attention to sweat classes and other events it offered in the quarter, including this year's Ghost Race, which had a strong turnout. According to CEO and Director Calvin McDonald, "35,000 guests registered for the race, of which nearly half were men and 20% were new to Lululemon."
The focus on curated events like this plays into the company's idea of wanting to be a lifestyle brand over simply an athletic apparel brand. Further pushing this idea forward, Lululemon has been piloting a membership program, which offers, "several benefits, including either a pant or pair of shorts designed exclusively for the program, access to sweat classes, attendance at curated events, personal development and free expedited shipping on e-commerce orders," according to McDonald. The program is currently being tested in Edmonton with a membership fee costing $128. However, McDonald expects to raise that membership fee before the program is rolled out to other locations.
The company is holding a strong front against other competitors in the space, such as Nike, which is also exploring experiential spaces, and in contrast to Lululemon, is pushing hard to grow its female customer base.