1 Retail Growth Stock to Consider Buying in 2022

What was that about the death of retail? The recent months have been full of surprises for investors, not the least of which is the fact that while e-commerce solutions continue to drive fast-paced retail growth, consumers are increasingly returning to shop in-store, as they did during the recent holiday season.

In this segment of Backstage Pass, recorded on Dec. 22, Fool contributor Rachel Warren discusses one top retail stock that's continuing to win for investors despite a highly competitive and rapidly evolving business environment. 

Rachel Warren: The stock I want to talk about is Lululemon (LULU -0.32%). Shares of the stock are down about 15% over the last month. But the stock has gained about 500% over the last five years.

This is interesting. We know that Lululemon is a leader in the athletic apparel industry. Well, this is an industry that is on track to hit a valuation of nearly $70 billion by 2022. Just to give you an idea of what a big jump that is, the U.S. athletic apparel market is the largest in the world. This is the U.S. market alone, it's expected to hit this valuation. That's up from $54.3 billion in 2015.

The thing I like about Lululemon is not only has the company done a really good job of growing its online sales, as well as its sales in person and its stores. But it's also done a really good job of targeting both male and female shoppers.

Athletic apparel is something that we saw huge increases of people buying earlier in the pandemic. You know, you're staying at home, you want something that maybe is cute, and comfy, and colorful, and makes you feel good.

But the thing about Lululemon is these are things that people wear them to work out. But they also wear them out and about to go run errands or to go hang with friends. There is a lot of different areas in which its products are very relevant to its consumer. It's not necessarily just if you're going to the gym or doing your home workout. I think that is something that gives the company a lot of staying power.

In the most recent quarter, so its overall net revenue was up 30% year-over-year. Its net revenue grew also by nearly 30% in North America. But internationally, its net revenue was up 40%year-over-year.

Something that was really interesting to me was the comparison of its comparable-store sales to its direct-to-consumer net revenue. Lululemon's direct-to-consumer net revenues, essentially, its online sales, e-commerce sales. Direct-to-consumer net revenue was up 23% year-over-year.

Comparable-store sales were up 32%. Another thing that was very interesting was those online sales, online net revenue, that represented 40.4% of its total net revenue for the period. It has this very, very strong presence online.

But its stores are continuing to do really, really well. I believe it's had to deal with some extended closures, off and on, throughout the pandemic as it would not have been deemed an essential retailer. But even so in the most recent quarter, the company opened 18 net new company-operated stores in that three-month period.

This is a company that I think is doing really well and has done, again, a really good job of navigating I think what is a very difficult balance between having a lot of success in the e-commerce space, which is highly competitive and growing more so, and then also continuing to maintain a presence where people want to go and shop in your stores.

That is definitely a stock to keep an eye on, I think if you're wanting to invest in this space.