After working to build its online presence, increase its store count and expand internationally, Canadian athletic apparel brand Lululemon announced last week that its profits and revenue for its fiscal second quarter beat Wall Street expectations. Not only is this good news for the company but also for shareholders, especially given that the stock is up more than 54% in 2019 alone.
If you invested in Lululemon 10 years ago that decision would have majorly paid off. A $1,000 investment in 2009 would be worth nearly $20,300 as of Sept. 6, 2019, for a total return of 1,929%, according to CNBC calculations. In the same time frame, by comparison, the S&P 500 earned a total return of nearly 260%. The athletic apparel company, which went public in 2007, has a current share price around $197.
Overall, the brand has been building up its core women's business over the last few years, as an increasing number of female consumers buy into the "athleisure" trend in the U.S., sporting more casual clothing, such as leggings and tank tops, to run errands.
CNBC: Lululemon stock as of September 6, 2019.
On Friday, Jim Cramer, host of CNBC's "Mad Money," referred to Lululemon as "the best of all retailers" following the company's earnings announcement.
"Lululemon remains a fabulous growth story: The company's putting up new stores at a rapid pace, and now they're doubling down on the international expansion," Cramer told CNBC in January 2019. He added that the brand's e-commerce business "is absolutely on fire."
This quarter, Lululemon credited its menswear division with helping it beat quarterly expectations and raise forecasts for the year. In Q2 alone, the men's business saw a 35% increase in sales, which surpassed the growth rate for women's apparel during the same time period.
Despite experiencing multiyear growth, Lululemon has faced a number of challenges. In 2013, Chip Wilson, the brand's founder, made controversial comments after a company recall of too sheer yoga pants.
Wilson said that the line's pants "do not work" with certain women's bodies, which sparked outrage. As a result of the pushback, the company's shares dipped and Wilson stepped down from his role as chairman of Lululemon in 2013. In 2015, he quit the board altogether, but remains a shareholder in the business.
Earlier this summer, Lululemon opened its largest store to date in Chicago and made its first foray into selling personal care products such as deodorant, face moisturizer and lip balm. On Tuesday, the company also launched a new luxury streetwear label called Lab, signaling more potential for expansion since Lab is Lululemon's first-ever spinoff brand.
In the next five years, Lululemon aims to double men's and online sales, and has set a goal to quadruple international revenue by 2023, CNBC reports.
Retail experts credit Lululemon's ability to reinvent itself as the reason it continues to pull ahead. "Lululemon is doing what very few other retailers are doing right now," said Roxanne Meyer, a senior retail research analyst at MKM Partners, in a recent interview with CNBC's "Squawk Box."
In addition to creating new product lines each season, Meyer says the retailer consistently innovates and expertly executes on new kinds of athletic gear, such as the brand's new waterproof wool line that's set to launch this fall and the recent relaunch of its popular Metal Vent Tech collection for men.
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