April 24, 2019 / 11:20 AM / 3 months ago

UPDATE 2-Lululemon targets annual revenue growth in low teens for next five years

(Updates forecast details, background)

By Arundhati Sarkar

April 24 (Reuters) - Lululemon Athletica Inc forecast annual revenue growth in the low teens for the next five years, as new Chief Executive Calvin McDonald tries to steady the ship after the abrupt exit of the Canadian yoga-pants specialist's last boss.

Lululemon, which turned women's yoga wear into mainstream fashion, has been looking to expand its online presence and offer more menswear to better compete with sportswear makers such as Under Armour Inc and Nike Inc.

The company said it hopes to more than double the size of its revenue from men's wear by 2023.

"We are really trying to get over the idea that Lululemon is a woman's brand," Chief Product Officer Sun Choe said.

Lululemon said it would raise awareness of men's wear through events, membership programs, video campaigns and marathons.

The push into menswear comes as Nike has begun targeting Lululemon's core female audience with its own line of yoga wear, launched at the end of last year.

The company, which earns close to 90 percent of its business from North America, also plans to quadruple its revenue from international markets in the next five years by focusing on expanding across China, the Asia Pacific and Europe, Middle East and Africa regions.

It expects annual revenue to grow at more than 30 percent in its international markets, with all regions expected to be profitable by 2023.

CEO McDonald, who took charge in August last year, comes from LVMH's cosmetics retailer Sephora, where he was head of the Americas region.

He replaced Laurent Potdevin who had abruptly resigned last February, with the company saying that he had fallen short of its "standards of conduct" without offering any details.

Lululemon also said it was planning to launch self care products, including deodorant, face moisturizer, dry shampoo and lip balm, at 50 stores in June. It also said it had tested footwear and would look to enter the market.

The 21-year old company, founded in Vancouver as a design studio by day and yoga studio by night, further said it would open an experiential store, with meditation, yoga and eateries, in July.

"The company put out exciting goals, however with the stock setting new highs every day, we believe these were largely expected. And with the targets provided, it now falls to management to execute," Instinet analyst Simeon Siegel said.

Lululemon expects operating income growth to exceed revenue growth annually, and sees modest gross margin expansion.

Shares of Lululemon touched a record high of $176.87 in morning trading, but pared early gains to trade broadly flat. (Reporting by Arundhati Sarkar in Bengaluru; Editing by James Emmanuel and Shailesh Kuber)

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