While Lululemon’s growth slows in North America, sales are picking up in China.
On Wednesday, Lululemon reported a 34% year-over-year jump in second-quarter revenue for Mainland China, to $314.2 million, with a 21% increase in same-store sales.
China made up 13% of the company’s total revenue, compared with 11% in the same quarter of the previous year. The athleisure powerhouse opened five new stores in China in the quarter.
The company had 127 stores in China at the start of the year and 438 stores in the US and Canada, per its annual report.
In contrast, Lululemon reported sluggish performance in North America, with net revenue rising just 1%, to $1.7 billion. The region’s share of the company’s total revenue fell to 73%, from 78% a year ago, but it remains Lululemon’s largest market.
The company reported that same-store sales in the US and Canada declined by 3% from the previous year, and it opened one net new store in the region last quarter.
Lululemon’s strong performance in China comes as the country’s retail recovers in pockets of the economy, with a 2.7% year-over-year increase in retail sales in July that surpassed expectations. This growth was driven by a resurgence in consumer confidence and spending, particularly online, aided by events like the 618 Online Shopping Festival.
Last month, Lululemon faced backlash in the US market after pulling its new “Breezethrough” leggings from shelves due to customer complaints about the design. Shoppers criticized the leggings for their unflattering deep V seam and poor fit.
The launch was a “test-and-learn” experience, said CEO Calvin McDonald on a Thursday call with analysts. He also said that the company plans to reintroduce the fabric next year.
The “Breezethrough” pants saga was reminiscent of another yoga pants blunder in 2013, in which the company’s yoga pants were too sheer and led to recalls. But this year’s Breezethrough release had a less severe impact than the sheer pants, wrote Tom Nikic, a Wedbush Securities analyst, in a note cited by Bloomberg.
Lululemon’s McDonald also said the Breezethrough issue was “negligible” for the company’s second-quarter performance.
The athleisure company reported overall revenue of $2.37 billion in the second quarter, a 7% increase compared to the same period last year.
