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Lululemon to Turn More Stores into Online Fulfillment Centers

Sales at Lululemon stores open for at least a year were up in the most recent quarter, rising by 3 percent versus a 1 percent increase a year earlier. But the active lifestyle brand’s e-commerce arm surpassed that brick-and-mortar performance to ring in an increase of 6 percent.

As Lululemon gears up for another busy quarter for e-commerce, the Vancouver-based brand said Thursday that it plans to ship online orders from more of its 379 stores.

During a conference call with analysts, chief executive Laurent Potdevin said Lululemon currently fulfills online orders from available inventory in 11 stores and will extend the service to 65 locations for the upcoming holiday season.

“This is yet another capability that further improves our ability to service our guests and optimize our inventory sell-through at full retail,” he said, noting that early results have been positive. “You’re going to see continual change through the entire [shopping] experience and it will benefit the stores as well. And we’re linking inventory. So when you think about ship from store, it’s really going to allow us to move [merchandise] much faster at full retail. So avoiding those markdowns in the stores and we’ll have access to those items much faster.”

Though Lululemon will only be shipping online orders from less than one-fifth of its store base, that could increase over time, particularly as the brand opens smaller stores in select markets across the United States and Canada. Known as “locals,” these hyper-local community stores will range between 1,000 square feet and 2,000 square feet in size (the average store is about 2,900 square feet) in places where Potdevin said there’s no need for a full store.

“With a smaller retail footprint, we are more innovative about the way we connect with and service our guest, and we are able to reach the full potential of the smaller store format with cover from our digital environment,” he said, later adding, “We can really support the availability of the product assortment in a more nimble way.”

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