International sportswear brands Lululemon Athletica Inc and Nike have expressed strong optimism about market opportunities in China this year, following their better-than-expected performance in the country.
On Friday, Lululemon said it posted a 78 percent year-on-year increase in revenue from the Chinese mainland in the fourth quarter, and a 67 percent rise for the full year 2023 compared to 2022.
Globally, the company's net revenue increased by 16 percent year-on-year to $3.2 billion in the fourth quarter, and rose 19 percent to $9.6 billion in 2023 compared to 2022.
"Our business remains very strong … we are building from a smaller base, we have 127 stores on the mainland at the end of the quarter and we see an opportunity to continue to add," said Calvin McDonald, chief executive officer of Lululemon, referring to its business on the Chinese mainland.
The international market continues to be underpenetrated and represents 21 percent of the business for Lululemon, according to McDonald.
The company operates 711 stores across the globe.
The holiday collection inspired by the Year of the Dragon is on display at the Nike House of Innovation Shanghai. [Photo provided to chinadaily.com.cn]
"Our new store openings in 2024 will include five to 10 stores in the Americas, with the rest of our international markets primarily on the Chinese mainland," said McDonald.
He attributed the solid growth in China to the localized approach of the brand, which has leveraged relationships within the community through brand ambassadors, instructors and influencers that have resonated locally.
Its brand awareness on the Chinese mainland improved from 9 percent at the beginning of last year to 14 percent by the end of 2023, McDonald said.
Lululemon is continuously expanding its portfolio to meet rising demand from existing consumers and enhance repeat purchases, said Adam Zhang, founder of Key-Solution Sports Consulting Co.
"We believe that the growth rate will be significantly above our guidance of 10 to 11 percent for the full year," said Meghan Frank, chief financial officer of Lululemon, on the company's expectations for its mainland market this year.
"To improve profitability in that region, our near-term priority is to grow top line and capture the unaided brand awareness opportunity we see there and go after new guest acquisitions this year," Frank said.
Global sportswear producer Nike Inc posted a 6 percent year-on-year revenue growth in the third quarter to February in China at $2.08 billion, a sixth consecutive quarterly rise.
