Lululemon Sees Strong Growth in China Despite Sluggish North American Sales

Lululemon, a popular athleisure brand, experienced a significant increase in revenue from China while facing slower growth in the US and Canada. Despite recent backlash over the design of their new "Breezethrough" leggings, the CEO mentioned that it had a minimal impact on revenue.

Growth Discrepancy: China vs. North America

In the second quarter, Lululemon reported a remarkable 34% year-over-year revenue growth in Mainland China, reaching $314.2 million, accompanied by a 21% surge in same-store sales. China now contributes 13% of the company's total revenue, up from 11% in the previous year. The brand expanded its presence in China by opening five new stores during the quarter.

On the other hand, the North American market showed sluggish performance, with only a 1% increase in net revenue, totaling $1.7 billion. Although still the primary market for Lululemon, North America's share of total revenue dropped from 78% to 73%. Same-store sales in the US and Canada declined by 3%, with the company adding just one new store in the region last quarter.

Consumer Confidence and Retail Recovery in China

Lululemon's success in China aligns with the country's retail rebound, as seen in a 2.7% year-over-year growth in retail sales in July. This growth was fueled by renewed consumer confidence and increased online spending, boosted by events like the 618 Online Shopping Festival.

Lessons Learned from the "Breezethrough" Leggings Backlash

Despite facing criticism and backlash in the US market for the design of their "Breezethrough" leggings, Lululemon's CEO, Calvin McDonald, described the situation as a learning experience. He reassured analysts that the fabric would be reintroduced next year. The incident, reminiscent of a previous yoga pants blunder in 2013, had a less severe impact on the brand's performance.

Overall, Lululemon reported a 7% increase in revenue, totaling $2.37 billion in the second quarter.

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By: lwee@insider.com (Lian Kit Wee)
Title: Lululemon Sees Strong Growth in China Despite Sluggish North American Sales
Sourced From: www.businessinsider.com/lululemon-revenue-jump-china-slow-growth-us-canada-breezethrough-2024-8
Published Date: Fri, 30 Aug 2024 05:23:53 +0000