1/ Thread: $LULU FY 3Q'22 Update
This was an interesting call to understand how strong Lulu's core brand is, and also how dismal the state of connected fitness is right now.
Here are my notes.
This was an interesting call to understand how strong Lulu's core brand is, and also how dismal the state of connected fitness is right now.
Here are my notes.
2/ Company Operated Stores: In 3Q'22, revenue from stores +38% YoY. Impressive that store productivity already exceeded 3Q'20 (pre-pandemic) level.
DTC/e-commerce was +21% which was incredible given +93% growth same quarter last yr
Overall topline +30% YoY; 2-yr CAGR +26%
DTC/e-commerce was +21% which was incredible given +93% growth same quarter last yr
Overall topline +30% YoY; 2-yr CAGR +26%
3/ Women's segment +24%
Men's +29%
Accessories +40%
By geography: 2-yr CAGR China +70%, Europe +20%
Overall international segment is profitable, Europe is not. On track to open 40-45 international stores (50-55 overall) this year.
Men's +29%
Accessories +40%
By geography: 2-yr CAGR China +70%, Europe +20%
Overall international segment is profitable, Europe is not. On track to open 40-45 international stores (50-55 overall) this year.
4/ ~40% of inventory is comprised of core seasonless product
"While we're comfortable with both the quality and
quantity of our inventory, demand for our brand is outpacing supply, and our business could have been even stronger without the supply chain challenges"
"While we're comfortable with both the quality and
quantity of our inventory, demand for our brand is outpacing supply, and our business could have been even stronger without the supply chain challenges"
5/ "we're seeing more of our store only shift into omni. We are seeing our omni-guest spend more"
6/ Inventory +22%, ahead of +15-20% expectation primarily because of supply chain issues as they are making decisions ~6 weeks out. Q4 likely peak for supply chain issues, but expect it to linger till first half next year. 
7/ On footwear initiative: "we're still on track for a spring '22 launch. And just as a reminder, and
consistent with how we've shared it, it's a test and learn for us"
consistent with how we've shared it, it's a test and learn for us"
8/ On Mirror: A few days ago, @Post_Market said acquiring Mirror was perhaps a mistake for Lulu. I thought that was "harsh and it's too early to say".
Maybe early, but gotta say Post is perhaps more likely to be right here.
Maybe early, but gotta say Post is perhaps more likely to be right here.
9/ Lulu acquired Mirror in Jun'20 and initially guided $100 mn topline. Mirror ended up posting $175 mn last year.
Lulu guided $250-275 mn topline for Mirror this year. Now it's $125-130 mn. Such an incredible turn of events.
Puts things in perspective for connected fitness.
Lulu guided $250-275 mn topline for Mirror this year. Now it's $125-130 mn. Such an incredible turn of events.
Puts things in perspective for connected fitness.
10/ Thankfully, Mirror is just ~3% of Lulu's topline and management hasn't chased growth at any cost as they expect earnings dilution (~3-5%) to remain same. Dilution is also expected to go down further next year.
11/ Lulu repurchased 582k shares at an avg cost $406. Buyback really picked up this year with YTD of $491 Mn (SBC ~52 Mn).
Buybacks in the last two full years was 173 Mn and 64 Mn respectively.
Buybacks in the last two full years was 173 Mn and 64 Mn respectively.
12/ Outlook: despite the severe guide down of Mirror, topline increased for full year increased from $6.19-6.26 Bn to $6.25-6.29 Bn
Gross margin is expected to expand 100-150 bps despite supply chain issues
Gross margin is expected to expand 100-150 bps despite supply chain issues
End/ My thoughts on Lulu from Jun'21 (no paywall): mbi-deepdives.com/lulu2/
All my twitter threads: mbi-deepdives.com/twitter-thread…
All my twitter threads: mbi-deepdives.com/twitter-thread…
• • •
Missing some Tweet in this thread? You can try to
force a refresh
