June 18, 2014, 12:25 PM

The web grows 22% for Lululemon in Q1

Store sales decline 4% during the period

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Athletic apparel retailer Lululemon experienced a troubling 2013 fiscal year, including a recall of defective yoga pants and the resignation of CEO Christine Day. Despite the public relations missteps, the retailer’s web sales grew each quarter in 2013, and that trend continued in the first quarter of 2014.

Lululemon, No. 112 in the Internet Retailer Top 500 Guide, increased its direct-to-consumer business 22.2% in the first quarter of 2014 to $66.0 million from $54.0 million in the first quarter last year.

For the quarter ended May 4, 2014, the retailer reported:

  • Direct-to-consumer sales, mainly online sales, rose 22.2% year over year to reach $66.0 million compared to $54.0 million in Q1 of 2013.
  • Direct-to-consumer sales accounted for 17.2% of total company revenue compared with 15.6% in the first quarter last year.
  • Net revenue increased 11.2% to $384.6 million from $345.8 million in the first quarter of fiscal 2013.
  • Gross profit for the quarter increased 14.6% to $195.7 million from $170.7 million a year earlier. As a percentage of net revenue gross profit increased to 50.9% from 49.4% in the first quarter last year.
  • Income from operations for the quarter increased 5.9% to $69.8 million from $65.9 million, and as a percentage of net revenue was 18.2% compared to 19.1% in the first quarter of fiscal 2013.
  • Net income decreased 59.8% to $19.0 million compared with net income of $47.3 million in the first quarter of 2013.
  • Comparable store sales decreased 4%.

The retailer announced plans to open its second U.S. distribution center in Ohio, which will go live with e-commerce to retail fulfillment in Q1 2015, which will allow stores to replenish inventory via Lululemon.com. CEO Laurent Potdevin told analysts she is enthusiastic about this and other web strategies.  “We are working on click-to-brick and this is a geo-based strategy that we’re doing in partnership with Google as well,” Potdevin said during a recent earnings call. “And we’re also accelerating our affiliate partnership with ambassador studio, elite athletes who promote our content and drive traffic to our site.” The ambassador program is comprised of hundreds of athletes, trainers and yoga instructors in major cities across the world that promote Lululemon merchandise on social media and blogs.

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