Fy21q3 had a revenue of USD 1.45 billion, an increase of 29.8% and a net profit of USD 190 million, an increase of 30.7%
Lululemon fy21q3 (August 1, 2021 ~ October 31, 2021), the global leader in sports and fitness clothing, had a revenue of US $1.45 billion (about RMB 9.287 billion), an increase of 29.8% (regardless of the exchange rate), an increase of 58.3% over fy19q3. The increase was mainly due to the revenue growth of the same store and the opening of new stores.
The net profit of fy21q3 was USD 188 million (about RMB 1.204 billion), an increase of 30.7% and 49.1% compared with fy19q3.
By region, the U.S. revenue was $982 million, an increase of 26.6%, accounting for 67.7% of the total revenue; Canada’s revenue was US $244 million, an increase of 34.6%, accounting for 16.8%; The revenue of other international regions increased by 39.7%, accounting for 15.5%.
By category, the revenue of women’s fy21q3 was USD 985 million, an increase of 25.1%, accounting for 67.9% of the total, and a decrease of 2.6pct; Men’s clothing revenue was US $343 million, an increase of 44.2%, accounting for 23.7% of the total, an increase of 2.4pct; The revenue of other categories was US $122 million, an increase of 32.9%.
The performance of offline stores recovered rapidly with the improvement of the epidemic situation, and maintained double-digit growth in all channels
Fy21q3 all channel comparable sales increased by 27%, sub channel:
Offline Direct stores: the revenue of fy21q3 Direct stores was US $707 million (about RMB 4.529 billion), an increase of 38.2%, accounting for 48.8% of the total revenue, and the revenue of the same store increased by 32%. The increase was mainly due to the extension of business hours and the reduction of passenger capacity restrictions of most stores, and the increase of store traffic. The operating profit of fy21q3 Direct stores was US $181 million (about RMB 1.157 billion), an increase of 61.7%.
Fy21q3 company continued to expand the market, with a net increase of 18 Direct stores, including 12, 4 and 2 in Asia Pacific, North America and Europe respectively; As of October 31, 2021, the company has 552 Direct stores, with a year-on-year increase of 37.
E-commerce DTC channel: fy21q3 e-commerce revenue was USD 587 million (about RMB 3.757 billion), an increase of 22.6%, accounting for 40.4% of the total revenue. The increase was mainly due to the growth of e-commerce platform traffic and customer unit price, but the visitor conversion rate decreased. The operating profit of fy21q3 e-commerce channel was USD 257 million (about RMB 1.646 billion), an increase of 22.6%.
Other sales channels: other channels include OLE and other temporary stores, wholesale channels, mirror and related content subscription services, with a total revenue of US $157 million (about RMB 1.004 billion), a year-on-year increase of 23.0%, accounting for 10.8% of the total revenue, mainly due to the increase in the number of OLE and other temporary stores and the increase in revenue with the improvement of the epidemic situation.
Business recovery drives gross profit growth and profitability continues to rise
The company’s fy21q3 gross profit was 829 million US dollars (about 5.31 billion yuan), with a gross profit margin of 57.2%, a year-on-year increase of 1.1pct. The main reasons for the increase include: 1) the rate of use and depreciation expenses (use and depreciation expenses / total revenue) decreased by 0.6pct with the growth of revenue; 2) 0.3pct growth caused by exchange rate changes; 3) price reduction sales decreased, but freight increased due to supply chain problems. Overall, the cost decreased slightly and the product profit margin increased by 0.2pct.
The company’s fy21q3 net interest rate was 12.9%, with a year-on-year increase of 0.09pct and a decrease of 0.8pct compared with fy19q3. The sales and management expense rate of fy21q3 company was 37.6%, with a slight increase, mainly due to the increase of brand investment, but at the same time, the channel operation expense rate decreased, with a year-on-year increase of 0.8pct under the comprehensive effect.
The inventory turnover efficiency is improved, the cash flow is abundant, and the operation is in good condition
As of October 31, 2021, the company’s inventory scale was USD 944 million (+ 45.84%), the inventory turnover rate was 2.21 times (+ 0.32), and the inventory turnover efficiency was improved. In terms of cash flow, the company’s net operating cash flow of fy21q1-3 was USD 658 million, a year-on-year increase of 670.6%, with abundant cash flow.
The guidance for the whole year is raised, and the annual revenue of fy21 is expected to increase by 42.0 ~ 42.9% year-on-year
Fy21q3 revenue exceeded the upper limit of the previous guidelines, and the company raised the annual guidelines. The company expects fy21q4 to achieve revenue of USD 2.13 ~ 2.17 billion (about RMB 13.643 ~ 13.899 billion), and fy21 revenue of USD 6.25 ~ 6.29 billion (about RMB 40.031 ~ 40.287 billion), an increase of 42.0% ~ 42.9% and diluted EPS of USD 7.38 ~ 7.45/share (about RMB 47.27 ~ 47.72 / share).
Mirror business is still in its infancy and is expected to help the coordinated development of main brands in the future
In July 2020, the company acquired smart fitness mirror and arranged smart home fitness business. Fy21q1-3 consumers’ demand for mirror was lower than expected. The company reduced the annual revenue of mirror business from US $150 million to US $125 ~ 130 million (about 801 ~ 832 million yuan).
The company believes that the mirror business is still in its infancy. Fy21q3 announced that it will sell mirror in nearly 40 stores in lululemon Canada since November, and launch innovative applications such as mirrorweights. At present, the market has received good response. It is expected to further expand the lululemon brand community through mirror in the future, improve customer stickiness and customer unit price, and realize the coordinated development of the two.
Adhering to the “power of three” three pole development strategy, some goals are expected to be achieved early
In 2019, the company put forward the three pole plan and is committed to achieving the following three goals in 2023: 1) continuously innovate and expand products, deeply cultivate men’s clothing business and double revenue; 2) Improve the customer experience and double the revenue of digital channels; 3) Expand the international market outside North America and quadruple the revenue.
Fy21q3 company continued to promote the implementation of the plan and made some progress: 1) product innovation and category expansion: the company developed 30 + innovative product styles and became the designated clothing supplier of the Canadian Olympic Committee from 2022 to 2028, and the revenue of men’s products increased by 44.2% year-on-year, continuously exceeding the growth rate of women’s products; 2) Develop Omni channel to improve customer experience: the CAGR of digital channel revenue in two years is 54%, and the store efficiency has exceeded the level in 2019; 3) Continue to open stores and expand the market: fy21q3 company opened new stores in many places around the world, with a net increase of 18 stores, and the international revenue increased by 39.7%, surpassing the growth rate in North America.
Risk tip: the business demand of intelligent fitness mirror is less than expected; The global competition of yoga sports equipment, the core category, has intensified; The number of newly expanded stores is less than expected; Risks such as tight supply chain and rising sea freight.
