- Lululemon's bread and butter has long been women's yoga pants and workout clothing, but increasingly it is diversifying into new categories as competition in the market heats up.
- This includes a push into men's wear, self-care, and an Amazon Prime-style membership program .
- The company reported strong fourth-quarter and full-year earnings for 2018 after market close on Wednesday, sending its share price soaring .
Lululemon's bread and butter has long been
women's yoga pants and workout clothing, but increasingly it is
diversifying into new categories as c ompetition in the athletic wear market heats up .
And it seems to be paying off.The company reported strong fourth-quarter and full-year earnings for 2018 after market close on Wednesday, sending its share price soaring
. After adjusting for currency fluctuations, same-store sales were up
17% for the year, making it one of the company's strongest years to
date, CEO Calvin McDonald said in a call with investors on Wednesday
afternoon.
Analyst Neil Saunders from GlobalData Retail
described the company as one of the "brightest stars in the retail
sector," in a note to clients on Wednesday.
Here's how it is staying ahead of the pack:
Adding casual clothing to the mix
Facebook/Lululemon
As the athleisure craze took off, Lululemon
looked to capitalize by offering additional casual, non-athletic wear,
and even business casual clothing.
Its men's ABC (anti-ball-crushing) pant $128
stretchy pants that are Lululemon's version of comfortable jeans are
paving the way here and have become one of its most popular items in
this category.
Its expansion into business casual has been
"well received and superbly executed," Saunders said in a note to
clients on Wednesday.
He continued: "Product extensions are usually
fraught with risk as they can easily dilute the focus and purpose of a
brand. However, Lululemon has maintained its core emphasis on producing
mindful products that have great design with superior functionality."
Shifting focus to menswear
Facebook/Lululemon
Lululemon has been doubling down on menswear
and plans to grow this category into a $1 billion business by 2020. The
company said in a recent earnings call that it is well on its way to achieving this.
"Men's is one of our largest and most exciting areas of future growth," McDonald told investors on Wednesday.
Cashing in on the $11 billion self-care industry
Facebook/Lululemon
Lululemon launched its self-care collection in
October. This includes deodorant, dry shampoo, cleanser, moisturizer,
and balm. These items are not currently available online but only in
select stores.
"We believe this category holds great
opportunity for us and is a natural extension for our brand," McDonald
said on Wednesday. "We continue to attract and acquire new guests, while
building greater share of wallet with our highly engaged existing
guests."
Launching an Amazon Prime-style membership
Facebook/Lululemon
In December, Lululemon announced
that it had been testing a new loyalty program in Edmonton, Canada. It
later announced testing in Denver. For a $128 annual fee, members were
treated to a pair of pants or shorts, access to Lululemon's classes and
events, and free shipping on online orders.
On Wednesday, McDonald said Lululemon plans to
expand this service to additional US cities in 2019, as it has seen
"wonderful take up" so far. This loyalty program provides the company
with a new stream of revenue and access to more customer data.
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