Lululemon athletica sees no signs of softening demand

The news: Lululemon athletica raised its full-year outlook after yet another solid quarter, as demand for high-end athleisure shows no signs of softening.

• The retailer’s sales rose 24% year-over-year (YoY) to $2.0 billion, outpacing the $1.93 billion forecast by a Refinitiv analyst poll.
• Earnings per share came in at $2.28, beating expectations of $1.98.

Zoom out: Activewear has been a rare bright spot for retailers in Q1, with premium brands like lululemon, On Running, Vuori, and Hoka notching significant sales gains.

• Nordstrom specifically attributed its strong performance in the Active category in Q1 to significant customer interest in offerings from Vuori, Hoka, and On.
• Hoka’s net sales grew 40.3% YoY in the quarter ended March 31, while global revenues for fiscal 2023 topped $1.4 billion.
• Startups Vuori and Alo Yoga also benefited from the shift to designer athleisure; the former currently has a $4 billion valuation and plans to open 100 locations worldwide, while the latter generated over $1 billion in sales in 2022.

The big takeaway: While it helps that lululemon, On, and Hoka cater to a more affluent consumer base, they have also successfully managed to carve out reputations for both fashion and performance, enabling them to stay top-of-mind with consumers.