Lululemon reported a +19% revenue increase to $2.2B during its Q3 2023 update, including North America revenue up +12% and comparable-store sales increasing +9%. Higher revenue and margins yielded a +24% increase in profits and generated $227M in cash. Retail will produce around $1,640 in sales per square foot this year.
On a net basis, Lululemon will have added 24 more locations domestically to end the year at 374 stores (and 700 globally). However, on a gross basis, the openings are twice the net number, with Texas and California getting the most at five each. Below, we show how newer stores are doing relative to the portfolio of locations that Placer can see. These are locations that were opened in May and one can see that these new locations on average are producing nearly 20% more visits than the chain-wide average. Additionally, our data indicates that there has been a shift in real estate strategy during 2023 with an emphasis on more open-air centers and lower streetscapes.
Earlier this year, we put together an analysis entitled “Why Lululemon Is a Barbenheimer-Sized Phenomenon in Hollywood”. Placer visitation growth shows that the region was a star for traffic growth in the quarter as well.
As it relates to recruiting men into the brand, Lululemon CEO Calvin McDonald stated, “In North America, our market share gains continue, and we know our guests respond well to product innovation and compelling marketing campaigns. In Q3 2023, we launched two new men's franchises, Steady State and Soft Jersey. These collections build out our lounge offering and continue to bring versatility across our men's assortment. Guest response has been very strong, and we are chasing into additional inventory for these two new hit franchises. Following the holidays, our stores and e-commerce sites will have a back-to-gym focus. For men, we'll feature items from our Pace Breaker and License to Train franchises to support our guests as they lean into their New Year fitness and well-being resolutions. We're also gearing up to launch men's footwear in the first quarter of 2024, which will be an important moment for Lululemon...When looking at men's brand awareness, it remains low, approximately 13% in the U.S...Building awareness and consideration remains top of mind for us, and we see ample opportunity to increase the media and brand-building commitment to the men's business. An example of this strategy is our recent targeted TV campaign. In Q3 2023, we tested TV in the U.S. with a campaign focused on bringing new male guests into the brand and featuring our iconic ABC bottoms. We are encouraged by the early results and the buzz created by this targeted investment, and we plan to continue the campaign next year. In 2024, our marketing calendar has other men's moments planned, such as the footwear launch, and we will continue to leverage ways that paid media can raise our awareness among men who have yet to wear Lululemon.” (For the year, revenue for Lululemon's men’s business will be up mid-teens company-wide, to $2.2B.)
