Lululemon taking page out of Sephora’s playbook in quest to take over world

During McDonald’s five-year tenure at Sephora, the beauty store was a growth engine within the LVMH family of global luxury brands. Under McDonald’s leadership, Sephora more than once delivered double-digit annual growth in both revenue and profits and continued to gain market share. Along with particularly strong growth in North America and Asia, Sephora last year inaugurated a new territory in Germany and expanded its online presence in Scandinavia, Mexico, and the Middle East.

McDonald expressed his passion for Lululemon to dominate the globe by recognizing similarities between his current and past employers and seizing opportunities with international expansion, especially in Asia. “We all would agree, and when I was looking outside in that, we have a real big opportunity internationally, in particular in Asia, and it’s one that the team feels is a growth potential, just proportionate growth for this business and brand,” McDonald said.

“A framework of 10% square footage growth, a men’s business north of $1 billion, a digital ecomm penetration of more than 30%, and a bigger International business with Asia alone adding over $1 billion would be the ongoing building blocks,” RBC analyst Brian Tunick said in a note to clients, while raising his price target to $160 from $130.

Lululemon shares jumped as much as 15% to $158.70 on Friday — almost hitting Tunick’s target — after the company posted strong top and bottom results and lifted its full-year guidance.