Dive Brief:

• More than simply buoying Lululemon's online business, the pandemic pushed the athletics retailer to achieve a 2023 goal of doubling its e-commerce business three years early, CEO Calvin McDonald said on a fourth quarter conference call with analysts Tuesday. 

• E-commerce more than doubled for the full year, and grew 92% in the fourth quarter, McDonald said. The company also achieved its "largest annual share gain in recent history," thanks to growth in both men's and women's.

• While e-commerce was the superstar, Lululemon remains dedicated to its in-store customers, executives said, with plans to open 40 to 50 new stores this year globally. The company is also on track with its other two goals for 2023: doubling men's and quadrupling international, McDonald said.

Dive Insight:

Even with a pandemic that limited store capacity and left store comps down 28% in Q4, 2020 was a growth year for Lululemon. The company reported an 11% increase in net revenue for the year, to $4.4 billion, while revenue grew 24% in Q4 to $1.7 billion, according to a company press release.

In addition to maintaining its growth ambitions for Lululemon and reaching its e-commerce goal early, the company is also planning to invest further in 2021. An upcoming footwear launch (expected early next year) will enable Lululemon to offer "head-to-toe" products for customers, and this past summer's Mirror acquisition is already exceeding expectations, to the point where execs plan to invest more to further its growth.

For the full year, including before Lululemon's acquisition, Mirror brought in $170 million in revenue, and McDonald said he expects that number to grow by 50% to 65% over the next year, reaching $250 million to $275 million. Lululemon is adding two more production studios to triple the number of classes it can offer on Mirror, all of which are done by Lululemon ambassadors.  The company will also expand the at-home tech internationally this year, starting with Canada in time for the holidays.

The retailer's shop-in-shop strategy for the home fitness brand will expand as well, with 200 stores in North America selling Mirror this year. While all of the retailer's investments mean a total of $335 million to $345 million in capital expenditure for the year, analysts aren't worried about the extra cost.

"[I]t is our view that management has a demonstrated track record at successfully investing in long-term growth drivers (such as international and digital at the lululemon brand), and the core business trends remain largely in line with long-term plans as the company shifts from investment in stores (benefiting gross margin) towards digital (impacting SG&A)," Telsey Advisory Group analysts, led by Dana Telsey, said in an emailed note.

Other investments are targeted at stores and digital. With the online experience, McDonald said the company wants to find ways to replicate the in-store relationship it has with customers on its digital platforms, including enhancing storytelling and making other improvements.

"2020 has reset our expectations for what is possible," McDonald said of the retailer's e-commerce business, including how much more runway there is for growth in that channel.

In stores, the company will continue to use services like curbside pickup, virtual waitlists and appointment shopping, which became "guest favorites" during the pandemic. 

As to other brands encroaching on its territory, McDonald isn't worried. While many have declared their intentions to hone in on the women's market, McDonald says Lululemon has a "significant pipeline" of products, including expanding further into yoga, training and run categories, as well as introducing new activities.