What happened

Shares of lululemon athletica (NASDAQ:LULU) gained 90.5% last year, according to data from S&P Global Market Intelligence. That was way better than the 28.9% return of the S&P 500 index.

Investors have been high on the athletic apparel industry in recent years, as it's been one of the most consistent areas of the retail sector. Lululemon is one of the best performing companies in the group. It continued to report terrific growth last year as it expands globally and enters new product categories. 

A woman practicing yoga.

Image source: Getty Images.

So what

The brand is obviously hitting the right chord with its assortment across men's and women's categories. Revenue from men's, digital, and international channels were each up 30% or more in the most recent quarter.

What's most impressive is that Lululemon is investing in all these areas, including new store formats and launching new products like self-care while showing steady improvement in gross margin. This is mainly a result of investments in the supply chain to make it more efficient and an increase in product margin resulting from lower product costs. 

Now what

The Motley Fool's Anand Chokkavelu recently selected lululemon athletica as one of the top 20 best stocks to buy in 2020. Despite the stock's recent bull run, there is still a lot to like here.

One catalyst on the horizon is the upside to earnings from Lululemon's new loyalty program, which offers access to sweat classes and other goodies for an annual fee. As with other new initiatives, management is gradually rolling this out in select markets before expanding it more broadly. The program has been so successful that it's now available in four cities. Management is planning a broader rollout in 2020. 

Management also continues to like the momentum on the ground it's seeing Europe and Asia, where the company is investing in new store openings. Lululemon remains on pace to quadruple international revenue by the end of 2023 from last year's levels. International revenue made up nearly 13% of Lululemon's business in the third quarter. 

For the fourth quarter, management is calling for revenue and earnings to be up about 10% and 14% year over year, respectively, at the midpoint of guidance. Analysts are currently expecting revenue and earnings to be up 15.3% and 18.5%, respectively, in the year ahead.