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lululemon (LULU) Outlines Plan to Double Revenues by 2026
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Encouraged by robust gains from the pandemic-led athleisure boom, lululemon athletica inc. (LULU - Free Report) announced its Power of Three ×2 growth strategy. The move is likely to double its revenues from $6.25 billion in 2021 to $12.5 billion by 2026. The plan focuses on three key growth drivers, including product innovation, guest experience and market expansion.
The five-year plan is likely to quadruple international sales, along with doubling digital and menswear sales. Also, the women’s business and North America operations are each anticipated to witness a low-double-digit CAGR in revenues, with store channel growth in mid-teens in the next five years.
As part of its strategy, the company intends to expand in China as well as European markets, with plans to open stores in Spain and Italy. It has already ventured into new categories such as footwear with the launch of its running shoe, Blissfeel. Some other styles, namely Chargefeel, Strongfeel and Restfeel, will be introduced in the coming months. Post the successful pilot of the membership program, LULU intends to launch a two-tier membership program later this year. The new program, one free and one paid, will offer exclusive access to items, events and fitness classes, building a strong customer base. Also, the company is on track with expansion of its first trade-in and resale program, lululemon Like New.
For 2021-2026, total net revenue CAGR is expected to be 15%, with a slight expansion in the operating margin on an annual basis. Lululemon anticipates bottom-line growth to outpace revenue growth. Although the 2026 targets seem too bold, the company believes that these are achieveable due to its strong financial position.
Earlier, management launched a three-year plan, namely Power of Three, which aims at doubling sales in the men’s and digital categories, and quadrupling sales in the international unit by 2023. The company plans to keep investing in strategies to maintain customer footfall, including efforts to augment the store base and enhance shopping experiences. Driven by these plans, LULU had earlier anticipated delivering sales growth in the low-teens by 2023. lululemon had also expected some annual benefits of this plan, including modest gross margin improvement, a slight reduction in SG&A costs, operating growth in excess of sales growth, earnings per share growth equal to or more than operating income growth, and capital expenditure of 6-8% of sales.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 19.9% in the past three months compared with the industry’s growth of 0.8%.
Stocks to Consider
Some better-ranked stocks from the same industry are Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and Gildan Activewear (GIL - Free Report) .
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales and earnings suggests growth of 8.9% and 3.3% from the year-ago period’s reported numbers, respectively.
Delta Apparel currently has a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 95.5%, on average.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.
Oxford Industries currently carries a Zacks Rank #2. OXM has a trailing four-quarter earnings surprise of 96.7%, on average.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.
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lululemon (LULU) Outlines Plan to Double Revenues by 2026
Encouraged by robust gains from the pandemic-led athleisure boom, lululemon athletica inc. (LULU - Free Report) announced its Power of Three ×2 growth strategy. The move is likely to double its revenues from $6.25 billion in 2021 to $12.5 billion by 2026. The plan focuses on three key growth drivers, including product innovation, guest experience and market expansion.
The five-year plan is likely to quadruple international sales, along with doubling digital and menswear sales. Also, the women’s business and North America operations are each anticipated to witness a low-double-digit CAGR in revenues, with store channel growth in mid-teens in the next five years.
As part of its strategy, the company intends to expand in China as well as European markets, with plans to open stores in Spain and Italy. It has already ventured into new categories such as footwear with the launch of its running shoe, Blissfeel. Some other styles, namely Chargefeel, Strongfeel and Restfeel, will be introduced in the coming months. Post the successful pilot of the membership program, LULU intends to launch a two-tier membership program later this year. The new program, one free and one paid, will offer exclusive access to items, events and fitness classes, building a strong customer base. Also, the company is on track with expansion of its first trade-in and resale program, lululemon Like New.
For 2021-2026, total net revenue CAGR is expected to be 15%, with a slight expansion in the operating margin on an annual basis. Lululemon anticipates bottom-line growth to outpace revenue growth. Although the 2026 targets seem too bold, the company believes that these are achieveable due to its strong financial position.
Earlier, management launched a three-year plan, namely Power of Three, which aims at doubling sales in the men’s and digital categories, and quadrupling sales in the international unit by 2023. The company plans to keep investing in strategies to maintain customer footfall, including efforts to augment the store base and enhance shopping experiences. Driven by these plans, LULU had earlier anticipated delivering sales growth in the low-teens by 2023. lululemon had also expected some annual benefits of this plan, including modest gross margin improvement, a slight reduction in SG&A costs, operating growth in excess of sales growth, earnings per share growth equal to or more than operating income growth, and capital expenditure of 6-8% of sales.
Image Source: Zacks Investment Research
Shares of this Zacks Rank #3 (Hold) company have gained 19.9% in the past three months compared with the industry’s growth of 0.8%.
Stocks to Consider
Some better-ranked stocks from the same industry are Delta Apparel (DLA - Free Report) , Oxford Industries (OXM - Free Report) and Gildan Activewear (GIL - Free Report) .
Gildan Activewear presently sports a Zacks Rank #1 (Strong Buy). GIL has a trailing four-quarter earnings surprise of 66.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gildan Activewear’s current financial-year sales and earnings suggests growth of 8.9% and 3.3% from the year-ago period’s reported numbers, respectively.
Delta Apparel currently has a Zacks Rank #2 (Buy). DLA has a trailing four-quarter earnings surprise of 95.5%, on average.
The Zacks Consensus Estimate for Delta Apparel's current financial year’s sales and earnings per share suggests growth of 11.9% and 10.1%, respectively, from the year-ago period's reported numbers.
Oxford Industries currently carries a Zacks Rank #2. OXM has a trailing four-quarter earnings surprise of 96.7%, on average.
The Zacks Consensus Estimate for Oxford Industries’ current financial year’s sales and earnings suggests growth of 51.9% and 523.8%, respectively, from the year-ago period's reported numbers.