Athleisure Retailer's Brick-and-Mortar Expansion Follows Banner Year in 2020.
Lululemon said it intends to open 40 to 50 new store locations around the world in the year to come, a plan that reflects the high-end athletic wear company's biggest push yet into retail spaces.
The retailer's CEO, Calvin McDonald, said on an earnings call this week that the company's stellar performance in 2020 "reset our expectations for what is possible" and led executives to the conclusion that it was "under-penetrated from a brick-and-mortar perspective across all our markets."
As a result, Lululemon, which had more than 520 locations globally at the end of last year, plans to open "more stores in the market than we've ever opened," McDonald said.
"Consumer and health trends are only increasing and we are in the early innings of our growth potential across channels, across regions, across genders and across activities," McDonald told analysts.
The retailer intends to spend $335 million to $345 million on capital expenses in 2021. The company did not disclose what type of retail spaces it is seeking but said slightly more than half are expected to open in international markets including the United Kingdom, Germany and China.
Lululemon's trajectory runs counter to most of its peers in retail, many of which were hobbled by the coronavirus pandemic's arrival in March 2020. Lululemon was not immune to the effects of the health crisis, but it was better positioned than some to ride it out.
Though pandemic-induced closures did take a toll on Lululemon's stores sales, the company's bottom line got a big boost from hypercharged consumer demand for its particular niche: multipurpose clothing that could transition from the home office to housework to the home gym.
Because of this trend, Lululemon said it was able to substantially increase sales, market share and revenue, and also made inroads with new customers, particularly men. Lululemon ended its fiscal year 2020 with an 11% bump in revenue, a 100% increase in its e-commerce business and $1.2 billion in cash.
Over that same time, many other retailers closed their shops for good, but Lululemon grew. It ended 2020 with about 30 more locations than it had at the end of 2019.
Now that vaccines are rolling out, Lululemon executives said they anticipate yet another spike in demand, this time fueled by consumers' desire to get out of the house and resume normal social activities, like shopping.
"As operating constraints are removed, our teams are focused on accelerating our store productivity," McDonald told retail analysts on the call. "We have a number of guests that only shop our stores, and we are focused on reengaging with them at the frequency they shopped with us before COVID-19. In addition, we have a significant number of new guests who engaged with us for the first time online last year."
Meghan Frank, Lululemon's chief financial officer, said that the company intends to expand both in North America and abroad. Of the total number of stores in the pipeline, Frank estimated that 30 to 35 will open in international markets.
The company said it is also focusing on expanding its interactive at-home fitness product Mirror, which it acquired last year. Plans call for two production studios that could allow it to triple the number of live classes it offers on the product.
It also plans to expand its shop-in-shop strategy, which involves selling Mirror products at Lululemon stores, to more than 200 locations in North America this year.