Lululemon Reports 68% Spike in D2C Sales

Need to Know

• Direct-to-consumer (D2C) purchases accounted for 54% of overall sales for athletic apparel giant lululemon.
• D2C sales jumped 68% during the last quarter.
• Most stores were closed during the previous quarter, driving consumers online.
• Despite the online sales spike, the retailer saw an overall revenue decline but hopes to recuperate as stores begin to open.

Analysis

In the wake of widespread brick-and-mortar store closures due to the COVID-19 crisis, Canadian athletic apparel retailer lululemon saw a massive spike in direct-to-consumer sales.

In a press release revealing its overall results for the first fiscal quarter of 2020, Lululemon reported a 68% jump in direct-to-consumer purchases, accounting for 54% of its overall revenue for the fiscal period. Over the previous quarter, at which time lululemon was gearing up for an online sales push as stores were just recently shuttered, digital sales accounted for 33% of overall revenue.

In a statement, lululemon CEO Calvin McDonald said he was “proud of how lululemon has navigated these unexpected and unprecedented times. We are learning more every day about our guests — how they enjoy interacting with us online and what makes them comfortable as stores reopen.”

“Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further Omni experiences going forward,” he added.

However, despite the digital sales bump, lululemon’s overall revenue declined 17% over the quarter, to $652-million; the sportswear company ended this quarter with $823.0-million in cash and cash equivalents, according to the release.

Lululemon entered this fiscal quarter with a plan to bolster its digital operations, doubling down at that time on its plans to invest in social media initiatives and virtual events.

During the COVID-19 crisis, the brand also launched its Community Carries On initiative, publishing content and online workouts from store ambassadors, in an effort to keep consumers engaged during the lockdown. At the time, McDonald said the program “speaks to the power of our omni-educators and the engagement they can have with our guests whether in-store or online.”