Lululemon’s CEO reassures the market: “Our financial health is strong”

New York – In a recent earnings, Calvin McDonald, CEO at Lululemon, discussed the company’s fourth-quarter results, as well as the near future of the company in the light of the coronavirus pandemic. The yoga apparel brand’s leadership is confident in their results in the short and middle term.

“The safety and well-being of our people and our guests in the affected regions remains our highest priority. The current situation is clearly dynamic. Broadly speaking, and similar to many of our peers, we are seeing virus-related impact on performance across our markets,” said McDonald.

Luluemon’s CEO articulates their five “levers for success”

He also explained that they have closed their stores in North America, Europe, and New Zealand. Australia is operating on reduced hours, in China, all stores but the location in Wuhan are open on regular schedules and other Asian markets have gone back to normal, exception made of Malaysia. “In addition, we are closely monitoring our supply chain and staying in constant contact with our vendors, as they too navigate this situation,” added the company’s top executive.

Joining other traded apparel companies, Lululemon won’t be providing financial guidance at this time. Nevertheless, McDonald want to reassure their staff, shareholders and other stakeholders, saying that “The underlying health of our business is strong, which provides us with many levers to successfully manage through this period.” Those include:

A strong balance sheet. “We ended the year with 1.1 billion dollars in cash, no long-term debt, and a 400 million dollars untapped revolver.”

”Our investments in key technologies, including RFID and strong partnerships with our vendors, will enable us to maximize inventory across our network, while managing our overall levels.”

The power of their product. “Our assortment is less seasonal in nature, as many of our core styles are relevant year round, and can be held for future use.”

”Our e-commerce sites, mobile apps and omni capabilities, allows our guests to shop in multiple ways, which is complemented by our agile store formats.”

”At our core, we solved sweaty problems for athletes, and we do not believe the current situation will change the trend toward people wanting to live an active and healthy lifestyle. These are some of the reasons we're confident in our abilities to navigate the near-term, while working to realize the opportunities over the longer term.”

Additionally, Lululemon’s management called out initial learnings from China, “which show us that our business will bounce back. We are not yet back to pre-closing volumes, but the business is getting stronger week by week. There is considerable work under way across the business to respond to the current situation, and I'd like to specifically update you on two of these work streams. The first is the support phase and the second is how we will enable the recovery phase,” highlighted the company’s CEO during the fourth-quarter earnings call.

Image: Lululemon Media room

 

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