Lululemon's e-commerce biz on the rise, accounts for 25.4% of total revenue

Lululemon Athletica Inc has reported a net revenue of US$928.8 million for Q4 2017, ended 28 January 2018. This was an 18% increase compared to the same period in 2016. Total comparable store sales jumped by 12% for the quarter, comprising a 1% increase of comparable store sales and a 42% increase in e-commerce.

E-commerce revenue for the quarter totalled US$236.1 million, forming 25.4% of total revenue, compared to US$164.3 million in Q4 2016. This news comes after the company recently appointed Justin Richmond as its chief strategy and digital officer.

According to Stuart Haselden, chief operating officer,  during a recent conference call, that Q4 2017 saw "powerful benefits" from its new website and cleared expenditure pressure from digital covering. Haselden said that the website relaunch was the main reason that allowed lululemon to achieve the revenue growth in e-commerce.

This is due to the improved functionality, availability of more compelling content and storytelling, as well as improved product inventory. With the new website, lululemon witnessed a 20% increase in site traffic and 19% increase in mobile conversions.

"Digital business is a low hanging fruit, with additional opportunities in the near term to fuel further conversion increases with website improvements. There are plans to explore search and personalisation [on the website]," he said.

He added that the company managed to achieve revenue growth in the fourth quarter while scaling product innovation, expanding internationally and introducing new product formats.

"The steady improvements in product assortments and key innovation launches are setting us up well for this year. We are seeing the hard work of the last year continuing to pay off," Haselden added.

International expansion continues to be a focus for lululemon, as it accelerates store growth in Asia and Europe. The company is looking forward to 2020 and aims to become a "truly global business" that is dual gender and digitally enabled, Haselden said. He added that lululemon aims to ensure that store and online communications are driving authentic guest connections in new and innovative ways.

The company has opened 46 new company-operated stores since Q4 2016, including 12 in Asia, two in Australia and New Zealand, and 24 in the US. At the end of Q4 2017, lululemon had 404 company-operated stores in total, compared to 406 in Q4 2016. This includes 11 stores in Asia, 31 in Australia and New Zealand and 230 in the US. During the same period, it also had a total of 23 showrooms compared to 51 at the end of Q4 2016. Of the 23 showrooms, four were in Asia, seven were in the US and 12 were in Europe.

Company-operated store revenue totalled U$618.9 million, accounting for 66.6% of total revenue. This was compared to US$570.8 million in Q4 2016, which formed 72.3% of total revenue. Meanwhile, other revenue including sales from outlets, temporary locations such as seasonal stores, license and supply arrangements totalled US$73.76 million, compared to US$54.9 million during the same period in 2016.

Glenn Murphy, executive chairman of the board also said during the recent conference call that its focus on people, community and guest experiences offer "competitive advantages" for the company. He added that a search for lululemon's CEO is still underway and the board is confident in its ability to attract top global consumer executives.

"We are taking our time to meet as many as people as we can to make the right decision," Murphy said.

This comes as lululemon's former CEO Laurent Potdevin resigned effective immediately in February this year, after exhibiting behaviour that fell short of the company’s standards of conduct, such as exemplifying integrity and respect for one another.