Though it has faced a troubling acquisition in recent years, athleisure brand Lululemon Athletica has built an $8-billion empire.
Key Details
- Unlike its apparel competitors in recent months, Lululemon has successfully built its customer base and increased its sales.
- The athleisure company has accomplished this despite an acquisition misstep during the pandemic. The company purchased Mirror, a smart fitness platform, in 2020.
- Purchasing Mirror proved to be a troubled decision, but the company has quickly pivoted away from selling Mirror’s hardware to its subscription app, Fortune reports.
- While purchasing Mirror, now rebranded Lululemon Studio, was a misstep, the company’s quick pivot showed its ability to take risks and correct course when they do not work out—a quality key to Lululemon’s ongoing success.
Why it’s news
This year, Lululemon made the Fortune 500 list for the first time. It ranked 461 on the list due to its $8.1 billion in revenue last year. Since its CEO Calvin McDonald took over in 2018, the company has nearly tripled its revenue, and its stock price has doubled.
McDonald is not slowing down when it comes to the company’s growth. In a 2022 meeting, he told investors his goal is to achieve $12.5 billion in revenue by 2026. Now that the company is becoming a strong competitor against Nike, that number seems even more achievable.
Lululemon is a high-end brand targeting wealthy, hip and health-conscious clientele. It was one of the first athleisure companies developing a brand of athletic wear that looked good and felt good with high-quality fabrics. Recently, it has expanded into menswear, golfing, and hiking clothes.
The company has established its communities by forming Lululmeon classes at retail stores and running groups for customers.
Unlike its competitors, Lululemon takes a test-and-learn approach rather than spending too much time analyzing the market and waiting to see what trends emerge, Fortune reports. Other companies are slow to adapt to customer trends, but Lululemon’s quick adjustments keep them at the forefront of the latest fashions.
Rivals like Gap, Athleta, and Under Armor have struggled recently, while Lululemon has thrived. Even with new brands like Vuori, Alo Yoga, and Rhone entering the market, Lululemon has remained dominant.
One of Lululemon’s strategies has been slowly entering one clothing category after another. Initially, the brand was predominantly known for women’s athleisure, but lately, the company has expanded into other categories.
In 2014, the brand launched its line of menswear. However, Lululemon faced a difficult challenge as it was primarily known as a women’s line. Shifting to a dual-gender brand can often be difficult for established retailers, Fortune reports.
But now, Lululemon’s men’s bottoms are a popular choice for office wear across the U.S. Lululemon gives office workers a professional yet comfortable option. The retailer also sells running shorts and other men’s activewear.
Lululemon’s next risky move is into the footwear category—putting the company in direct competition with Nike. Last year, the company introduced four women’s shoe styles. This year, it added a few more and has announced plans for men’s shoes next year.
Some critics of Lululemon’s strategies worry that the company is pursuing too many new categories at once, arguing that it cannot give its full attention to each new project, Fortune reports.
At the same time, the athleisure company is planning to take its retail stores global. Canada and the U.S. generate 86% of the company’s revenue, but it has plans to expand in the UK and China. China, in particular, represents a significant market expansion, Fortune reports. Its 100 stores in China generate 8% of global sales.
While the company grows quickly, it remains much smaller than Nike. Nike is expected to generate $50 billion in sales this year. However, some experts, like Coresight Research’s Marie Driscoll, think Lululemon will eventually be on par with Nike.
“They’re becoming a global brand, and they have a very strong relationship with women and a growing relationship with men. There are some things Nike could learn from Lululemon,” she says.