By: Kohl Wimer ’18
Is Lululemon a passing fad or staple in the athletic wear industry? Its consistent growth and continual expansion suggest the latter. This premium athletic wear company has become the face of women’s apparel, pioneering the “yoga pants” that revolutionized the industry. Additionally, Lululemon molded the athleisure industry by combining fashion and performance into each product. The idea is that athleisure clothing can be worn for exercise and general use. The popularity of it is evident in the $44 billion U.S. market alone, which Lulu holds about 4-5% of, but in order to maintain its presence in this industry, Lululemon must continue expanding.
One key area of expansion is in its men’s component of the business. According to the CEO, Laurent Potdevin, about 80 percent of current revenue comes from women’s clothing. However, with Lululemon expanding overseas, Potdevin hopes to appeal to both men and women: “As we grow the international business, we don’t have to rewrite the history…We come into the market as a men’s and women’s athletic brand.” By tapping into the international market, Lululemon will not only grow its consumer base among women but also among men. Potdevin seeks to create a new image of Lulu that caters to all genders, which is most feasible among foreign consumers who are unfamiliar with the brand. By rebranding Lululemon in foreign markets, the company projects to reach $1 billion in annual salesfrom its men’s clothing by 2020—a 300% increase from its current sales. Additionally, the athletic wear markets in Europe and Asia are far less competitive than the saturated North American market, which presents an opportunity for expansion. In North America, Lulu must compete with household brands like Nike and Under Armour, as well as many startups carving into the $44 billion market. However, the athleisure market is not as well established in Europe and Asia and, therefore, breeds fewer competitors. Lululemon recently opened stores in the United Kingdom, Germany, and Switzerland as well as in China and South Korea. Shareholders and potential investors should keep an eye out for their expansion and revenue overseas.
With the 2016 fourth quarter and annual earnings being released later this month, shareholders will soon be able to a reflect on the year as a whole. Its fourth quarter earnings per share are projected between $.99 and $1.01, and in the third quarter of 2016 Lulu’s earnings per share were up to $.50 from $.38 from the third quarter of the previous year, indicating continual growth. Lululemon is a strong long term investment with consistent earning growth and expansion into foreign markets.