Categories Analysis, Retail

Lululemon (LULU) expects pandemic tailwinds to continue in a post-COVID-19 world

For the first quarter of 2021, Lululemon expects revenue to range between $1.10-1.13 billion

Shares of Lululemon Athletic Inc. (NASDAQ: LULU) have gained 67% in the past 12 months. The company reported fourth quarter 2020 earnings results a day ago beating market estimates on both the top and bottom lines. The outlook given for 2021 was mixed, causing the stock to fall 2% on Wednesday.

Lululemon saw strong performance in 2020, particularly in ecommerce, and is making significant efforts to take advantage of the momentum in this space. The acquisition of Mirror provides another opportunity as the company believes the at-home fitness space has potential for further growth.

Quarterly performance

Net sales increased 24% year-over-year to $1.7 billion while total comparable sales rose 21%. GAAP EPS amounted to $2.52 while adjusted EPS totaled $2.58. All metrics came ahead of analysts’ projections.

Digital growth

Ecommerce contributed around $900 million to the top line, making up 52% of total revenue in Q4. Digital comps rose 92% in the quarter and more than doubled for the full year. This growth was driven by strong traffic and conversions, which in turn benefited from channel shifts, investments in digital marketing and efforts to improve customer experience.

These results not only surpassed the company’s expectations but also helped it achieve its goal of doubling its ecommerce revenue by 2023 from 2018 levels a good three years in advance. Lululemon is investing significantly in expanding its omnichannel capabilities and improving its fulfilment options to keep up this momentum.


Lululemon acquired MIRROR in 2020 for $500 million. MIRROR delivered approx. $170 million in revenue last year. Lululemon sees opportunity in the at-home fitness market over the long-term and the company does not believe that the momentum seen in this space during the pandemic will wane once the crisis subsides due to the convenience associated with working out at home.

Lululemon is adding production studios and instructors to help increase the number of live classes it is offering to customers along with other features to improve the experience. The company plans to expand MIRROR to more markets starting with Canada by the holiday season this year as well as to other locations across North America. Lululemon expects MIRROR’s revenue to increase 50-65% to $250-275 million in 2021.


For the first quarter of 2021, Lululemon expects revenue to range between $1.10-1.13 billion, reflecting a two-year compound annual growth rate of 19% at the midpoint. GAAP EPS is expected to be $0.81-0.85 while adjusted EPS is estimated to be $0.86-0.90.

For the full year of 2021, revenues are projected to be $5.55-5.65 billion. GAAP EPS is anticipated to be $6.10-6.25 while adjusted EPS is expected to be $6.30-6.45. All the guidance numbers for the quarter and full year were better than analysts’ projections except for FY2021 adjusted EPS, which fell short. Wall Street was not happy and this took a toll on the stock.

Click here to read the full transcript of Lululemon Athletica Q4 2020 earnings conference call

Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!

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