Sportswear enjoys sprinting sales in China

Leading global sportswear brands are capitalizing on the substantial growth potential of the Chinese market, which is driving their expansion and investment strategies.

Among these brands, Lululemon Athletica Inc has emerged as a standout performer, reporting impressive financial results for the fourth quarter and fiscal year ending Feb 2. The company's growth trajectory in China has been a key contributor to its performance.

In the Chinese market, Lululemon recorded an impressive 46 percent year-on-year surge in net revenue for the fourth quarter, while full-year revenue grew 41 percent compared to 2023.

The company has been proactive in expanding its presence, culminating in the operation of 151 stores in China by the end of the fiscal year. In 2025, the company plans to see revenue growth in China of between 25 percent and 30 percent.

On a global scale, Lululemon's net revenue increased by 13 percent, reaching $3.6 billion in the fourth quarter. International sales played a crucial role, climbing by an impressive 38 percent, while revenue from the US market showed a more modest increase of 7 percent. For the entire fiscal year, Lululemon reported a 10 percent net revenue growth year-on-year, totaling $10.6 billion.

This growth was largely driven by a 34 percent increase in international sales and a 4 percent rise in the US market, with gross profit for the year growing 12 percent to $6.3 billion on a yearly basis.

Calvin McDonald, CEO of Lululemon, attributed these results to a mix of product innovation and heightened brand engagement.

"Our fourth quarter results exceeded expectations as we continued to introduce more newness and innovation into our product assortment," he said, highlighting the company's commitment to evolving its offerings to meet consumer demands.

In line with its ambitious growth strategy, Lululemon has actively pursued store expansion, opening 18 net new locations in the fourth quarter and an additional 56 stores throughout 2024. This growth brings the total number of Lululemon stores globally to 767.

The company has set its sights on making China its second-largest market globally by 2026.

Meghan Frank, chief financial officer, underscored the company's dedication to increasing brand awareness in international markets. Currently, unaided brand recognition in China is in the mid to high teens, compared to the 30s in the US.

"We expect to open 40 to 45 net new company-operated stores in 2025 and complete about 40 optimizations. We expect overall square footage growth of about 10 percent. Our new store openings in 2025 will include about 10 to 15 stores in the US market, with the rest of our openings planned in our international markets, the majority of which will be in China," Frank said.

To enhance its presence in China, Lululemon is leveraging various marketing initiatives, including high-profile events like the Formula 1 races in Shanghai, which feature brand ambassador and star F1 driver Lewis Hamilton. The three-day racing event attracted over 220,000 spectators, surpassing last year's attendance.