YipitData's Quick Pivot on Lululemon Transactions Results in US Revenue Estimate 8pp More Accurate than Consensus

Background

In summer 2021, sudden changes to the format of lululemon transaction receipts impaired the ability of alternative data providers to track in-store spending. After rebuilding our systems to account for this change, our highly accurate 2Q revenue projections were far ahead of consensus and competitors, generating significant upside for clients.

The Challenge

Beginning in July 2021, we saw a steep decline in in-store LULU transactions in our US transaction panel. The team quickly determined that the descriptions of more than half of in-store debit purchases made at LULU stores no longer included any part of the word “lululemon” in the description.

The Method

We briefly paused publishing and rebuilt our parsing systems to identify LULU transactions using other strategies, including:

  • Developing proprietary web scrapers to collect LULU-specific keywords for use in combing through debit and credit card transaction data descriptions

  • Investigating transactions by known lululemon power users in our datasets to identify unknown LULU stores

The Solution

In addition to our thorough QA processes, this pivot was possible because of the diversified data sources (web scraping, email receipt, online sales data) incorporated in our LULU product as well as card data, while most other data providers rely on a single source of insights. We relaunched our model, designed to capture these “untagged” LULU transactions, in August with our FY2Q estimate far ahead of consensus.

The Results

When LULU reported 2Q earnings in September, our US revenue estimate was within ~1%, beating consensus by ~8% and we correctly predicted that 3QTD was tracking toward a guide 6-8% above consensus expectations. This also resulted in LULU revising its full year guidance by 6%, indicating they expected to hit their 5-year revenue growth targets originally set for 2023 two years early.

LULU stock rose more than 10% the day after the result, and we received feedback from clients that they not only appreciated our accuracy in predicting the beat, but the transparency and spirit of partnership we provided in flagging the issue as soon as we recognized it, helping them understand the underlying complications, elevated risk, and how we adjusted for it.

Email us or fill out the form and someone will be in touch shortly.