- 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, an Amazon Prime-style membership program, and most recently selling upscale self-care products online and in 50 of its stores.
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And it seems to be paying off. In March, the company reported fourth-quarter and full-year earnings for 2018. 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 after earnings. This growth streak continued into the first quarter of 2019, where same-store sales rose 14%.
Neil Saunders of GlobalData Retail recently described the company as one of the “brightest stars in the retail sector” in a note to clients.
Here’s how it is staying ahead of the pack:
Adding casual clothing to the mix
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 in March.
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
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 in March.
During the first quarter of 2019, menswear same-store sales grew 26%.
Cashing in on the $11 billion self-care industry
As of June 18, Lululemon’s self-care products are now available to purchase online and in 50 stores.
This upscale collection launched in October and includes deodorant, dry shampoo, cleanser, moisturizer, and balm. Items cost between $12 and $28.
We believe this category holds great opportunity for us and is a natural extension for our brand,” McDonald said in March. “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
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.
Lululemon plans to expand this service to additional US cities in 2019 and 2020. McDonald said in March that 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.