Lululemon’s international expansion fuels growth

Lululemon is seeing its international sales spike this holiday season, despite slowing U.S. numbers. The brand’s stock rose 17% in early trading Friday, raising the company’s full-year sales. In the third quarter, net revenue increased 9% to $2.4 billion, per a press release.

The Vancouver-based athletic apparel maker, which has become extraordinarily popular with Gen Z, has seen relaxed numbers recently. As consumers have pulled back on discretionary items, like pricey athletic clothing, in September, the retailer reported losing 51.7% in the year-to-date period. The LULU stock lost 36.3% in the past year, and dropped 41.9% over three years. The drop-off saw the brand tightening its forecast earlier this year.

Still, despite underwhelming U.S. numbers, Lululemon picked up steam in China this year. The brand’s net revenue increased 39% year-over-year in the third quarter. China’s net revenue was $318.3 million, up from $228.6 million the previous year. And, according to the latest earnings release, international net revenue increased by a third (33%), or “30% on a constant dollar basis,” even though U.S. sales only climbed by 2%.

“Our performance in the third quarter shows the enduring strength of lululemon globally, as we saw continued momentum across our international markets and in Canada,” Lululemon CEO Calvin McDonald said in the release. “Looking to the future, we are pleased with the start to our holiday season, and we remain focused on accelerating our US business and growing our brand awareness around the world.”

In the US, the brand has been plagued by competitors like Alo Yoga, Athleta, and Nike, which offer strikingly similar products. Dozens of products with a similar look (with solid reviews) can be found on Amazon or the budget athletic apparel maker, Fabletics, for a fraction of the price. And as inflation continues to drive prices, many shoppers have turned to buying lower-priced Lululemon “dupes.”

Lululemon addressed the dupe problem head-on by attempting to educate customers about the quality of products. Last year, the brand invited customers to trade in their knockoff Align leggings for a pair of the real thing in what it called a “dupe swap.” “It felt like a very fun way to step into a cultural conversation,” Lululemon chief brand officer Nikki Neuburger told Fast Company at the time, “and part of why we had total confidence doing that is because we really do know our products are the best; and if you try them, we felt folks would have that sensory aha moment.”

Sales with Lululemon’s core market — women in their 30s and 40s — may have slowed, but younger shoppers still seem to want their Lululemon leggings, matching tops, and jackets. According to a 2024 survey, the brand led the athletic apparel category with Gen Z. Regardless of cost of decent dupes, or of the existence of high-quality competitors, Gen Z is anything if not loyal to the brand’s they love.