Lululemon Athletica Reports 41% Digital Sales Growth For the Fourth Quarter

lululemon athletica (NASDAQ: LULU) reported better-than-expected sales and earnings for the fiscal fourth quarter which ended Feb. 2, 2020. Revenue increased by 20% year over year, bringing full-year revenue to $4 billion. Higher margins boosted earnings by 23% year over year on an adjusted basis. 

The highlight of the quarter was an acceleration in direct-to-consumer revenue, including online sales, which surged 41% year over year. This channel comprises more than a quarter of Lululemon's business. 

A group of men and women practicing yoga during a class.

Image source: Getty Images.

Digital momentum is crucial in this environment

Before the COVID-19 outbreak put the economy on shut down, Lululemon was continuing to outperform the retail industry. In a statement, CEO Calvin McDonald said, "2019 was a strong year for lululemon, as our teams executed against our Power of Three growth plan." 

Lululemon's growth strategy involves growing sales through product innovation, investing in the digital shopping experience, and expanding the brand around the world. All three areas reported robust growth for the quarter, but unfortunately, that momentum will come to a temporary halt, with Lululemon closing all stores in North America and Europe through April 5.

The company is not providing guidance for fiscal 2020, as the COVID-19 situation remains fluid, but McDonald provided encouraging words. "The strength of our brand and strong financial position will help us manage through the day-to-day, while continuing to effectively plan for and invest in our future," he said in a press release.

Lululemon ended the quarter with nearly $1.1 billion in cash and no debt, and as Nike reported in its latest earnings, Lululemon's digital sales capabilities could be a lifesaver for the company in the short term with everyone staying home.

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John Ballard owns shares of Lululemon Athletica and Nike. The Motley Fool owns shares of and recommends Lululemon Athletica and Nike. The Motley Fool has a disclosure policy.

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