2021 was a milestone year, as we exceeded $6 billion in annual revenue for the first time, and as we expect to deliver every Power of Three revenue goal ahead of schedule. Despite the ongoing challenges in the macro environment, we continued to deliver at a high level for our guests and our shareholders.
I am proud of our performance and accomplishments, which would not have been possible without the commitment and agility of the people of lululemon, as they found new and powerful ways to engage with our guests and support one another.
Our strengths continue to be broad and balanced across channels, categories,
activities, genders, and geographies. And our vertically integrated business model allows us to navigate through—and thrive in—an ever-changing environment.
OUR IMPACT
In 2021, we also advanced our Impact Agenda and multi-year commitments to drive meaningful, positive change in the world. We made inspiring progress across our three core pillars, addressing pressing social and environmental issues that impact our people, communities, and the planet.
Within our Be Human pillar, we believe our strong employee offerings have supported our ability to maintain momentum through the
current environment. To advance our commitment to IDEA—Inclusion, Diversity, Equity, and Action—we expanded our team and funded new initiatives that accelerate our actions and create accountability.
Within our Be Well pillar, we launched our lululemon Centre for Social Impact to further advance equity in wellbeing across our communities. Initiatives included a $5 million investment across local grassroots partners through our Here to Be grant program, as well as global and national non-profits. Our second annual Global Wellbeing Report benchmarked the state of wellbeing around the world and explored the drivers and barriers to being well.
Within our Be Planet pillar, we took meaningful steps to advance our sustainable product and raw materials innovation. We joined the MyloTM Consortium and established strategic multi-year partnerships with industry leaders such as LanzaTech and Genomatica to create and use lowerimpact fabrics and materials. We also launched our first re-commerce program, lululemon Like New, in two test markets, and in 2022, will roll out broadly in the US. And, we entered into a virtual power purchase agreement to help cut emissions across our value chain.
These important milestones are only the beginning of our journey, as we work to establish a position of leadership in corporate and social responsibility within our industry.
IN CLOSING
I would like to express my gratitude to our entire lululemon collective. Our ability to exceed our 2023 revenue goals ahead of schedule is a testament to the strength of our business, rooted in the connection our people and guests share with our brand. I also would like to take this opportunity to thank Glenn Murphy for his dedicated service, guidance, and leadership as our Chair of the Board since 2017, and as our Executive Chair for the majority of 2018. This year Glenn is stepping down as Chair but will continue to serve on our Board. We are pleased that our long-term Board member Martha (Marti) Morfitt will take over the duties as Chair, ensuring a smooth transition and becoming the first woman to serve in this capacity for lululemon. Our board of directors selected Ms. Morfitt to serve as director because she has extensive public board experience and years of leading and managing branded consumer business operations and strategic planning.
All of us at lululemon are proud to contribute to the growth of this business, building on our unique strengths to deliver a powerful experience for our guests and one another.
Calvin McDonald Chief Executive Office
Founded by Chip Wilson in Vancouver, Canada in 1998, lululemon is a yogainspired, technical athletic apparel company for women and men. What started as a design studio by day and yoga studio by night soon became a standalone store in November of 2000 on West 4th Avenue in Vancouver’s Kitsilano neighbourhood.
OUR VISION
Our vision for our store was to create more than a place where people could get gear to sweat in, we wanted to create a community hub where people could learn and discuss the physical aspects of healthy living, mindfulness and living a life of possibility.
OUR BEST LIFE
A constant that has never wavered is our desire to empower people to reach their full potential through providing the right tools and resources, and encouraging a culture of leadership, goal setting and personal responsibility.
We live a life we love. We set our goals to align with our vision, and it’s why, so often, our one-year goals become today’s reality.
Connection
We build trusting relationships by valuing and celebrating each human’s uniqueness.
Personal Responsibility
We act with honesty and integrity, taking full accountability for our choices and their impact.
Inclusion
We remove barriers to equity so that everyone has a sense of belonging.
Courage
We have the heart and strength to do big, challenging, and important things for each other and our planet.
Fun
We infuse joy and laughter into all we do, which in turn allows us to turn work into play.
At the end of 2021, we operated 574 stores in 17 countries across the globe. In addition to being a venue to sell our products, our stores give us a direct connection to our guest, which we view as a valuable tool in helping us build our brand and product line.
In fiscal 2022, our new store growth will come primarily from companyoperated store openings in Asia and in the United States. Our real estate strategy over the next several years will not only consist of opening new company-operated stores, but also in overall square footage growth through store expansions and relocations.
Our apparel assortment includes items such as pants, shorts, tops, and jackets designed for a healthy lifestyle including athletic activities such as yoga, running, training, and most other sweaty pursuits.
We also offer a range of products designed for being On the Move, fitness-related accessories, and footwear. We expect to continue to broaden our merchandise offerings through expansion across these product areas.
During the second quarter of 2020, we acquired Curiouser Products Inc., dba MIRROR. MIRROR is an in-home fitness company with an interactive workout platform that features live and on-demand classes.
Our design and development team continues to source technically advanced fabrics, with new feel and fit, and craft innovative functional features for our products. Through our vertical retail strategy and direct connection with our customers, whom we refer to as guests, we are able to collect feedback and incorporate unique performance and fashion needs into our design process.
In this way, we believe we are better positioned to address the needs of our guests, helping us advance our product lines and differentiate us from the competition.
MIRROR & fitness-related Apparel
growing in power of three goals
In 2021, we continued to invest in the core growth drivers of our business while also strategically navigating emerging COVID-19 variants, store closures and capacity constraints, and supply chain challenges. In addition, we believe we benefit from several consumer behaviors that provide tailwinds for the business.
Within Product Innovation, we continued to leverage our Science of Feel platform to engineer products that solve the unmet needs of our guests, with strength across both women’s and men’s and within each of our four key product areas of Yoga, Run, Train, and On the Move. Our proprietary research powered new innovations such as the Air Support Bra—designed with an innovative support system five years in the making— and the Take Form Mat— designed with cutting-edge technology to help improve yoga alignment. Our multi-year partnership with the Canadian Olympic Committee and Paralympic Committee is a powerful opportunity to showcase the lululemon brand and our technical apparel expertise on the world stage. We recently unveiled our inaugural footwear collection—made for women first—with many exciting opportunities ahead as we expand this category.
Within Omni Guest Experience, our continual investments in our channels engage our guests in new and compelling ways, meeting them where, when, and how they want to shop. Stores continue to be an important growth driver and connection point with our guests, and we opened 53 net-new stores in 2021.
Our ongoing digital innovation also contributed to the strength of our omni offering, on top of last year’s very strong performance. And, reflecting our enthusiasm for the opportunities for the business, we launched MIRROR in Canada, its first market outside of the United States, and introduced MIRROR shop-inshops in approximately 200 lululemon stores across North America, continuing to extend our ecosystem.
Within International, our revenue grew by more than 50% in 2021—and still only represents 15% of the business. We opened 43 net new stores internationally and continue to see how well the lululemon brand resonates across the globe. From 31 new stores in the People’s Republic of China, to continued growth in the rest of Asia Pacific, to our strong online performance in Europe, we believe our results reinforce that lululemon is a brand uniquely positioned in the global marketplace, and we are just getting started outside of North America.
Product Innovation
Building apparel to move and change with their environment and guests
Omni Guest Experience
Ensuring a compelling, and future-facing experience for our guests
International
Extending a reach to those who purse an active, mindful and balanced life
This summary compares 2021 to 2020:
Net revenue increased 42% to $6.3 billion.
On a constant dollar basis, net revenue increased 40%
Company-operated stores net revenue increased 70% to $2.8 billion
Direct to consumer net revenue increased 22% to $2.8 billion, or increased 20% on a constant dollar basis
Gross margin increased 170 basis points to 57.7%
Acquisition-related expenses of $41.4 million were recognized in 2021 compared to $29.8 million in 2020
Income from operations increased 63% to $1.3 billion
Operating margin increased 270 basis points to 21.3%.
Income tax expense increased 56% to $358.5 million. Our effective tax rate for 2021 was 26.9% compared to 28.1% for 2020.
Diluted earnings per share were $7.49 for 2021 compared to $4.50 in 2020. This includes $40.0 million and $26.7 million of after-tax costs related to the MIRROR acquisition in 2021 and 2020, respectively, which reduced diluted earnings per share by $0.30 and $0.20 in 2021 and 2020, respectively.
STOCK HOLD RETURN
The graph set forth below compares the cumulative total stockholder return on our common stock between January 29, 2017 and January 30, 2022 over the same period. This graph assumes the investment of $100 on January 29, 2017 at the closing sale price.
Information used in the graph was obtained from Bloomberg, a source believed to be reliable, but we are not responsible for any errors or omissions in such information.
These past five years show the gross profit world wide of our company. In the past four years, 2021 is the greatest leap in profit. The number presented are in the millions.
1199.62
1398.79
1816.29
In 2021, lululemons gross profit increased by 46%
Raised minimum base pay in North America to $15
Net revenue increased $1.9 billion, or 42%, to $6.3 billion in 2021 from $4.4 billion in 2020
Double our men’s net revenue
“We remain early in our growth journey, with our strong product engine, proven ability to create enduring guest relationships, and significant runway in core, existing, and new markets. Following our compelling track record of delivering against our goals, I am excited about taking our growth strategies to the next level to serve more and more guests around the world.” - Calvin
McDonaldIMPACT: PEOPLE AND PLANET
lululemon added its Impact Agenda priorities, including supporting its people and creating a healthier planet, to its successful Power of Three growth model. The new plan includes focusing on building an environment that is equitable and inclusive, advancing equity in wellbeing across its communities, and working to prevent environmental harm and helping to restore the planet. The Company remains committed to investing in its people and continues to expand its employee benefits, recently raising minimum base pay in North America and introducing more mental health, mentorship, and leadership programs for personal and career development.
Having grown revenue from $3.3 billion in 2018 to $6.25 billion in 2021, the Company will continue to focus on its three strategic pillars to fuel revenue growth over the next 5 years.
From 2019 to 2021, in the adult active apparel industry, lululemon gained more market share globally than any brand in this industry
GUEST EXPERIENCE:
To accomplish this goal, lululemon will continue to create world-class experiences by harnessing the power of its guest relationships to build stronger connections across both physical and digital, cultivate its community, and inspire through innovation. last week, the we announced the expansion of like New, the brand’s first trade-in and resale program, available in the U.S. April 22.
We will launch a new, two-tiered membership program later this year. The intent of the program is to build stronger engagement with its brand, community, and products, to create the most immersive fitness marketplace.
MARKET EXPANSION:
Under its new Power of Three ×2 growth strategy, lululemon expects to again quadruple its international revenues relative to 2021 by 2026. With significant runway in both new and core markets, lululemon is focused on ensuring local relevance and deepening connection as it continues to introduce the brand to more communities around the world.
Engaging guests in China Mainland, growing its core markets, and scaling and entering new countries across APAC and Europe will be key to delivering on its new goal. The Company also plans to open its first stores in Spain and Italy.
PRODUCT INNOVATION:
Having achieved its 2023 men’s growth target two years early, the Company expects to double the size of its men’s revenues in 2021 by 2026, along with ongoing expansion in its women’s and accessories businesses. The Company will leverage Science of Feel, its distinctive lens for innovation, to innovate across categories, with significant runway within Core performance (Run, Train, Yoga and On the Move) as well as exciting opportunities in Play (Tennis, Golf and Hike) and new categories such as footwear, which was recently launched.
Mr. McDonald is a growth-oriented leader with a proven track record helping large organizations scale, innovate, and elevate customer engagement in stores and across digital channels. In August 2018, Mr. McDonald served for five years as president and CEO of Sephora America’s.
Ms. Morfitt has been a member of our Board since December 2008. She has served as a principal of River Rock Partners, Inc., a business and cultural transformation consulting firm since 2008. Ms. Morfitt served as the CEO of Airborne, Inc.
Mr. Mussafer is lead director of lululemon and has been a member of our board of directors since September 2014. Previously, Mr. Mussafer also served as a director of lululemon from 2005 until 2010.
Ms. Ge Mahe has been a member of our Board of Directors since November 2022. She currently serves as Vice President and Managing Director of Greater China at Apple Inc.
Ms. Gibson is the Chief Institutional Client Officer of TIAA, a provider of secure retirements and outcomefocused investment solutions.Previously, Ms. Gibson was Executive Vice Chair of loop Capital Markets, an investment banking and brokerage firm.
Mr. McNeill has been a member of our Board of Directors since April 2016. Since January 2020, Mr. McNeill has served as Chief Executive Officer of DVx Ventures. Mr. McNeill served as Chief Operating Officer at lyft Inc. from March 2018 to July 2019.
