lululemon athletica (NYSE:LULU) has been a favorite of investors thanks to its Power of Three 2 growth plan. The company has capitalized on the value of physical shopping and the convenience of online involvement, which should improve its success. Continued commercial growth, as well as strong traffic patterns in stores and online, bode well.

As a result of these reasons, lululemon recorded its fifth consecutive quarter of sales and earnings surprises in the first quarter of fiscal 2023. Top and bottom lines both increased year over year as a result of ongoing commercial momentum and innovative goods. Strong traffic trends in retailers boosted comp growth.

Lululemon stock has risen 38% in the last year, outperforming the industry’s 7% gain. The stock also outperformed the Consumer Discretionary sector’s 10.6% rise and the S&P 500’s 15.7% gain.

An upward trend in the Consensus Estimate for LULU reflects a bullish opinion. The Consensus Estimate for lululemon’s fiscal 2023 sales and earnings per share (EPS) implies increases of 17.1% and 18.4%, respectively, over the previous year’s reported figures.

What Is LULU Doing Well?

Lululemon’s Power of Three 2 growth plan positions the company for long-term success. The company’s progress on this goal, which aims to double revenues from $6.25 billion in 2021 to $12.5 billion by 2026, has been a crucial driver. The approach is centered on three major growth drivers: product innovation, guest experience, and market expansion.

The five-year strategy is expected to treble overseas sales while also tripling internet and menswear sales. In addition, the women’s business and North America operations are expected to grow at a low-double-digit CAGR, with store channel growth in the mid-teens over the next five years. The company hopes to develop in China and Europe markets as part of its strategy, with ambitions to open stores in Spain and Italy.

Total net revenues are predicted to increase by 15% over the next five years, with an annual increase in the operating margin. The company expects bottom-line growth to outstrip revenue growth. Although the 2026 ambitions appear to be too ambitious, the corporation feels they are attainable because to its excellent financial situation.

Furthermore, LULU’s intention to capture growing online demand and ensure a robust shopping experience through faster e-commerce expenditures keeps it on course for growth. It has been investing in site development, transactional omni functionality, and fulfillment capabilities.

The company is working to improve its omnichannel capabilities, which include curbside pickups, same-day deliveries, and buy online, pick up in store. It is improving its mobile app in order to provide curbside pickup and is training store staff to help clients speed up transactions. Free online digital educator service for those who are unable to visit its stores bodes well.

LULU stands to benefit from increased store traffic as customers return to shop. In the fiscal first quarter, comparable store sales climbed 13% year over year and 16% on a constant-dollar basis. The company’s store traffic increased by more than 30%.

Lululemon continues to make investments to improve the in-store experience. It is leveraging its physical locations to enable omni-channel features such as buy online, pick up in store, and ship-from-store.

Several tactics have been taken by the organization to improve the passenger experience and reduce wait time. These include virtual waitlists, mobile point of sale, and appointment booking. These features allow customers to conduct transactions such as refunds, exchanges, and the purchase of gift cards without entering the store, minimizing wait times. Lululemon continues to grow its shop network.

Featured Image: Unsplash © Marco Tjokro

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