Lululemon strikes a confident pose in Q4, beating expectations

Dive Brief:

Athleisure innovator Lululemon Athletica pleased Wall Street Wednesday with a Q4 report that beat estimates thanks to cost cutting and supply chain improvements. Sales grew 17% to $704.3 million in the fourth quarter, compared to estimates for sales of $693.1 million.
Total comparable sales, including same-store sales and web sales, rose 11% on a constant dollar basis. Fourth quarter same-store sales rose 5% on a constant dollar basis, beating analysts' estimates for a 4.7% rise.
Lululemon also announced plans to grow revenue more than $4 billion over the next five years and double earnings at the same time. The news sent the retailer's shares up almost 10% on Wednesday.

Dive Insight:

Lululemon appears to be finally shrugging off its stumbles of recent years, meeting its new competition head on with improved logistics and not letting its cost-cutting measures inflict enough pain to prevent its performance. The retailer is at once increasing its appeal to athletes and to people who want to wear its clothes even without ever going to the gym or yoga studio.

The retailer has opened a "dual design and retail concept" store in New York dubbed Lululemon Lab that is testing limited-edition clothing designed for life beyond workouts. If clothes do well at the Lab, Lululemon plans on offering them at stores across the country. This new store fits in with Lululemon's plans to get to its 2020 goals, which includes investing in product innovation, opening more stores in big cities, and expanding internationally. As Fortune points out, the retailer is also focusing on its e-commerce efforts, but doesn't give much specifics on its plan for online.

But the company is nevertheless being cautious about its expectations for profit this year, projecting fiscal 2016 earnings in the range of of $2.05 to $2.15 per share, lower than analysts’ estimates for $2.16 per share.

That could mean that it’s seen the limit of cost-cutting efforts, which bodes well for innovation in its fabrics and designs. The retailer will continue to thrive as long as it can also continue to charge the kind of premium prices it has long enjoyed, even in the face of competition from some retailers that have copied its styles at lower prices.

"In 2015, we made bold moves across the organization, elevating design and innovation and developing our infrastructure to position us for the future," CEO Laurent Potdevin said in a statement. "As I look forward to 2016 and beyond, I am excited and confident that we have the right team in place to execute on our long term strategies."