Lululemon Athletica Inc.’s chairman, Glenn Murphy, joked on the company’s earnings conference call Thursday evening that you could laminate its latest results because they were so strong.
And Murphy is right: The athletic-apparel retailer showed itself to be in prime shape in the first quarter. Its comparable sales increased a whopping 20 percent over a year earlier, or 19 percent on a currency-adjusted basis. E-commerce sales rose 62 percent, and traffic to its stores increased in the “mid-single-digit range.”
I’ve noted before that Lululemon should have little trouble thriving even as the athleisure fashion trend cools off, and the chain clearly demonstrated that in the first quarter. Investors took note, sending shares up more than 15 percent on Friday morning. It was also just the ticket as the retailer hunts for a new chief executive officer.
The number that best tells this story is the strong growth in gross margin, which rose to 53.1 percent from 49.4 percent a year earlier. Lululemon attributed the gain in part to lower product costs, reflecting a long-running effort to improve its supply chain.
But, crucially, the company also said that it sold a favorable mix of higher-margin products and that it didn’t have to resort to as many markdowns. This is a powerful testament to Lululemon’s product design and technical innovation. Shoppers, apparently, think its high price tags are worth it in…