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Lululemon Athletica has a new game plan.
The Vancouver-based athletic apparel, accessories and footwear retailer revealed a new five-year growth plan Wednesday morning, ahead of the firm’s planned analyst day, setting its sights on $12.5 billion in revenues by 2026.
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“The success of our Power of Three formula in delivering on our 2023 growth strategy supports our goal to double the business over the next five years,” Calvin McDonald, the company’s chief executive officer, said in a statement. “We remain early in our growth journey, with our strong product engine, proven ability to create enduring guest relationships and significant runway in core, existing and new markets. Following our compelling track record of delivering against our goals, I am excited about taking our growth strategies to the next level to serve more and more guests around the world.”
In Lululemon’s most recent quarter, the company had about $6.25 billion in revenues for 2021, putting the company two years ahead of schedule, in terms of achieving its revenue goals.
The new, updated strategy — the “Power of Three x2” — entails additional product innovation, guest experiences and market expansion in order to double the retailer’s 2021 revenues in the next five years. The company also hopes to double both the men’s and digital businesses, while quadrupling international sales. In addition, Lululemon’s women’s business and North American operations are expected to generate low, double-digit annual compound growth rates in their respective categories, while the retail store channel will likely grow in the mid-teens range, the company said. Lululemon anticipates total net revenues will increase 15 percent, at an annual compound growth rate, by 2026. Earnings-per-share growth is also expected to outpace revenues growth.
“We are setting bold but realistic 2026 targets from a position of financial strength, while delivering on our 2023 goals with significant growth across our core business,” said Meghan Frank, Lululemon’s chief financial officer. “We have a long runway ahead and are well-positioned to build on our strong momentum and deliver sustainable long-term value creation to our shareholders.”
Some near-term goals include more new products, specifically in the men’s and women’s accessory businesses. (In the last year, the firm has released women’s sneakers, sustainable mushroom bags, Mirror accessories and tennis apparel, among other categories.) Lululemon also recently expanded its Like New resale program. In addition, the retailer is the official outfitter of Team Canada (a role it will retain through 2028).
“We have confidence that new product, integrated marketing and online momentum combined with loyalty, a healthy high-end customer demographic and athleisure fashion trends will yield traffic, improving conversion and comps,” John Kernan, an analyst at Cowen, wrote in a note. “Our survey indicates a high degree of loyalty and conversion levels should increase as we expect new product to incorporate fashionable versatility.”
Lululemon also plans to open its first stores in Spain and Italy, while building on its current momentum in Mainland China, the Asian-Pacific region and other parts of Europe. An experiential store in Houston is coming later this year.
Shares of Lululemon, which closed up 4.41 percent to $404.66 apiece Tuesday, are up about 28 percent, year-over-year.