Lululemon's strong brand has helped the athletic apparel company shake off the many challenges the retail sector faces these days, including food and energy inflation, which has left little room for discretionary items in stretched family budgets.

On Thursday, Lululemon reported strong Q1 2022 financial results that beat analyst estimates. Net revenue increased 32% to $1.6 billion. Total comparable sales increased 29% on a constant dollar basis, with similar store sales up 24%. Direct-to-consumer net revenue increased 33%, with direct-to-consumer net revenue accounting for 45% of total net income, up 44% from the first quarter of 2021.

"In the first quarter of 2022, continued momentum in the business enabled us to achieve a strong start to the year," said Calvin McDonald, chief executive officer, in a statement accompanying the financial report. "These results provide a solid foundation as we begin our next five-year journey and deliver against our new Power of Three ×2 growth plan."

That's a plan the company launched three years ago to spread and maintain the brand. It includes launching exciting new products across channels and different world regions and developing strategic partnerships. A couple of years ago, the company launched new product lines supporting yoga, running and training. It introduced an office/travel/commute category while also pursuing new opportunities, such as self-care.

Lululemon's strong results confirm that this plan has been working. It has strengthened its brand and sales momentum and has been on analysts' radar.

"We think the market is simplistically looking for evidence of continued sales momentum and stable margins outside of increased costs for distribution and shipping," John Zolidis, president of Quo Vadis Capital and a long-time stock follower, told International Business Times ahead of the release of the company’s earnings.

Placer.io further confirms the strength of the Lululemon brand and sales momentum. In a post in April, it reported substantial traffic for January and February.

"Visit growth did slow down slightly in March, with year-over-three-year (Yo3Y) overall visits up by only 5.8% and visits per venue down by 1.1%. But given the wider context of inflation negatively affecting consumer spending, even these somewhat weaker March metrics are a testament to Lululemon's current strength."

A strong brand has made Lululemon's products inelastic, meaning that consumers will be willing to stick with them even in a challenging environment of price hikes, as has been the case recently.

"Lululemon is shrugging off record-high inflation by posting stronger-than-expected first-quarter results," Andrew Latham, a certified financial planner and the managing editor of SuperMoney.com, told IBT. "In part, this is because Lululemon has positioned itself as a prime athleisure brand and caters to a wealthier clientele that can absorb the higher prices triggered by inflation and the ongoing supply chain problems. It is also a result of Lululemon's growing line of products, which recently expanded into sneakers and men's athleticwear."

Nonetheless, investors should be very cautious in chasing after Lululemon's stock at this point due to valuations.

"Looking at the stock, shares are 40% off their highs, which still makes LULU nearly the most expensive name we follow," says Zolidis.

However, he expects the company's shares to outperform a challenging retail environment from current levels.

Editor's note: Panos Mourdoukoutas owns shares of Lululemon.

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