Lululemon has emerged from the Covid-19 crisis as one of its greatest retail survivors, posting an operating surplus in the first quarter while almost all of its apparel contemporaries were bleeding red ink. 

Net revenue was US$652 million, a decrease of ‘just’ 17 per cent at a time when apparel brands like Guess dropped by 51.5 per cent, and Puma by 50 per cent. 

Lululemon reported $32.8 million income from operations in the quarter to May 3, down 75 per cent on the same period last year, but an outlier in the industry. 

“Lululemon has managed through the crisis better than every company in our coverage universe (with Nike perhaps the lone exception),” analysts led by Sam Poser wrote, reported by Marketwatch. “Lululemon has cemented its position as the best publicly-traded company in the specialty retailer sector, in our view.”

In its results statement, Lululemon said Covid-19 forced the closure of all of its company-operated stores in North America and Europe, with others in some Asia-Pacific markets over differing periods during the pandemic. 

But direct-to-consumer revenue soared 70 per cent on a constant-currency basis as the company targeted housebound consumers eager to buy comfortable exercise wear in place of their normal office attire.  

Direct to consumer net revenue represented 54 per cent of total sales compared to 26.8 per cent for the first quarter of last year.

“We are learning more every day about our guests — how they enjoy interacting with us online and what makes them comfortable as stores reopen,” said CEO Calvin McDonald. 

“Our strong digital business demonstrates the strength of our guest connection and the long-term opportunity to create further omni experiences going forward.”

Perhaps the most alarming downside to the quarter was an increase in inventories  of 41 per cent to $625.8 million.