hnnhcronin At the end of the first quarter, Lululemon predicted a large sales decrease due to misconceptions about the desires of their consumers, causing the stock to tumble 21%. Lululemon’s original spring collection featured mostly black and gray colors with very little prints, but the athletic-wear customers were not intrigued by the dull styles. However, following the misstep, Lululemon pivoted and introduced bright colors, busy patterns, and new styles of leggings and tops, and the retailer eventually ended the first quarter with earnings of 32 cents per share, beating analysts’ expectations.
Since the spring, Lululemon has been experiencing rapid sales growth despite the competition athletic retailers have been facing from Amazon’s seemingly unstoppable growth. On August 31st, Lululemon reported a gross profit of $297.4 million, up 17% since second quarter 2016, and diluted earnings per share of $0.36 for the second quarter that ended July 31st, 2017. Following this announcement, shares of Lululemon rose 7% Friday morning to $61.60. Before Thursday, Lululemon’s stock had been down 12% for the year due to investors’ concerns for the athletic retail market, but Lululemon is proving that it can rise above its competitors with innovative marketing and the expansion of e-commerce. In order to avoid a surplus of brick and mortar stores, Lululemon plans on closing as much as 55 of its Ivivva children’s shops in order to transform half of those locations into Lululemon stores and to conduct a majority of Ivivva business online.
Lululemon has also been successfully pursuing aggressive expansion in China, which is currently the largest emerging market for retail brands. In addition to geographic expansion, the Lululemon menswear brand has been selling particularly well, so much so that Lululemon CEO (give his name instead) predicts menswear to account for $1 billion in sales by 2020. The men’s products have been attracting more men to shop at Lululemon. Lululemon has emphasized comfort, as well as many practical uses of the clothing. Men’s shorts and pants are made of a much lighter-weight material than most men’s workout bottoms with the pockets for cell phones while shirts are made with an anti-odor and anti-chafe material helpful in preventing sweating.
Recently, Lululemon has been focusing on more than just its clothing offering, but its production of yoga mats and other sought-after workout equipment. Lululemon provides its customers an experience rather than just another shopping trip. The Vancouver-based company hosts yoga classes that can be attended both in-store or through video connection and sponsors community fitness events. Customers feel a connection to Lululemon because the brand connects with them and sponsors everyday fitness and yoga fanatics rather than professional athletes.
