"New guest acquisition remains strong, with transactions by first-time guests increasing over 20% in (the) quarter," McDonald told analysts on the company's earnings call, according to a FactSet transcript.
"Transactions by existing guests increased in the high teens. Traffic across channels remains robust, with store traffic up over 30%, and e-commerce traffic increasing over 40%. And importantly, we are not creating this traffic through markdowns or price promotions. Lululemon remains predominantly a full-price business, and we have not changed our promotional cadence or markdown strategy and we have no plans to do so."
Still, inventories rose 85% to $1.5 billion at quarter-end, up from $800 million in the year-earlier period. "The company believes its inventories are well positioned to support its expected revenue growth in the third quarter," it said in its earnings release.
An inability to clear inventories to make way for fresher products and steep declines in traffic to stores has plagued most other clothing retailers this earnings season.
Mrs. Treacy was complaining last week that her pickleball team’s Lululemon uniform was out of stock. In her search she found plenty of inventory on third party sites at more than 100% markups. That’s suggests robust consumer demand for the company’s products.
Meanwhile, the shipping bags they use are prone to interception with big bold letters telling everyone what is inside. That suggests high potential for lost inventory.
The share peaked in December below $500 and quickly unwound the overextension relative to the 1000-day MA. It is now steadying from that trend mean.