Lululemon “strategically uses air freight”

Leader in high-end sportswear Lululemon said it was looking to increase its inventory by 25-30% this quarter and use more air freight to bypass port delays that have hampered the global supply chain.

By describing his first quarter results for the three months ended May 2, the Vancouver-based retailer said inventories were up 17% from a year ago or 29% on a two-year basis, noting that it was at the comfortable with its current position but was taking action to stay ahead of the curve when it comes to possible future bottlenecks.

“As we continue to see delays in receiving inventory due to issues at ports, our team is strategically using air cargo [to offset that] and we are comfortable with the level and composition of our inventory as we move into the second quarter ”, Lululemon CFO Meghan frank said during the call to the results of the company.

Entry costs OK for now

In terms of input costs, Frank said Lulu “sees no material impact” in 2021, noting that everything he experiences is already reflected in the company’s forecast.

“We are definitely monitoring the market closely and managing and alleviating any pressures heading into fiscal 2022,” Frank said, vowing to share all details as they develop.

As countless businesses and industries face a combination of rising costs and try to offset them with higher prices, Lulu was visibly upbeat about the situation.

“Regarding pricing, because we don’t see any direct pressure there this year, we’re comfortable with our strategy through [so far this year] and we are working with the procurement team on any potential changes we may need to implement to move to exercise 22 “, Calvin mcdonald said in response to questions from analysts.

“We are constantly evaluating our range and reviewing upcoming new innovations and pricing accordingly to generate the best value for our customers,” he added.

See more growth to come

All of this comes at a time when the womens and menswear maker generated $ 1.2 billion in sales in the last quarter, marking an 88% increase in revenue, including a 125% increase in international sales, 50% growth in electronic commerce with 45% penetration of its direct-to-consumer (D2C) activity.

Lulu said its results were fueled by the continued expansion of its e-commerce business as well as a rebound in physical stores.

Although Lulu’s shares are down 20% from an all-time high last September and are down around 8% year-to-date, management remains confident in the company’s growth trajectory and in the rise of casual sportswear that motivates her.

“We have strategically managed a number of ongoing macro-operational challenges,” McDonald said, including store closings, capacity constraints and supply chain challenges.

“While challenges of all types will undoubtedly remain in the future, I am confident that we will continue to manage them effectively and deliver outstanding results,” he added, predicting that Lulu would continue to grow stronger each time. quarter because the 23-year-old brand was still very early in its growth story.

“Lululemon is well positioned for the post-pandemic world and the opportunities that lie ahead are significant and continue to develop,” McDonald concluded.



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