LULU CEO details '3 primary driving factors that accelerated through the pandemic'

·Writer
·2 min read

The pandemic has undoubtedly had poignant effects on consumer behavior, from becoming more environmentally conscious to living healthier lifestyles. According to Lululemon (LULU) CEO Calvin McDonald, in terms of consumer buying habits, three “primary driving factors” accelerated throughout the pandemic.

“I think what the pandemic did was accelerate the path that we are already on,” McDonald told Yahoo Finance. “And [the first factor of] those three are [that] the importance and expectation of what guests have with apparel — so I think of the versatility, the functionality, and quality of what guests are buying — definitely changed.”

The second and third driving factors pertained to consumer health consciousness and the way they chose to shop.

“Two, people are just trying to live a ... healthier lifestyle. They're aware of and they're sweating more and they're more conscious of the notion of well-being. Those are important factors,” McDonald said. “And three is how they buy, the adoption of online and willingness to do that.”

In an interview with anchor Alexis Christoforous as part of Yahoo Finance’s All-Markets Summit, McDonald discussed supply issues, worker shortages, the holidays, and the company's recent purchase of fitness company Mirror. Lululemon currently operates more than 500 stores in 17 countries, with company-operated stores reporting advancing revenue of 142% year over year and 9% on a 2-year compounded annual growth rate (CAGR) basis to $695.1 million for second-quarter fiscal 2021 in spite of industry-wide supply chain issues.

HONG KONG, CHINA - 2021/08/18: The Canadian sportswear clothing band, Lululemon store in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)
HONG KONG, CHINA - 2021/08/18: The Canadian sportswear clothing band, Lululemon store in Hong Kong. (Photo by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

Ultimately, all of the aforementioned accelerating factors “play to the strength” of Lululemon, according to McDonald. He believes that it puts the company in a position to leverage its strengths and capitalize upon the shifting needs and wants of its customers.

Looking forward, Lululemon forecasts a strong end to the year, with a robust holiday shopping season expected. McDonald stated that the company currently expects around a 25% two-year CAGR for Q3.

He also spoke to Lululemon’s resilience throughout the pandemic, highlighting the company’s consistency in paying rent, retaining its employees, and honoring purchase orders.

“And I think that just puts our business in a good position with our relationships with our partners. And we're supporting them through these difficult transitioning periods,” McDonald said. “And as they come online, I think [our] goodwill and investment in relationships is putting us in a good position.”

Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV

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Yahoo Finance's All Markets Summit
Yahoo Finance's All Markets Summit
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