Lululemon Posted First Quarter Gains in Both Profits and Sales

kim kardashian

Lululemon is known for its distinct athleisure wear with  a large aesthetic appeal, mostly from women. Fashionable product offerings were not only responsible for building a strong Lululemon allegiance, but the stores themselves played an important part by providing yoga classes and other local community activities.

According to Business Insider, problems that arose with product recalls in 2013 coupled with a growing competitive field might have led to lackluster same-store sales. In the first quarter, same-store sales declined by 1 percent, perpetuating the same loss from its latest fiscal year.

When Lululemon’s Luon pants were criticized for its inappropriate transparency, the British Columbia company suffered financial losses of enormous sums, damaging their reputation. It did not help that consumers were buying from competitors that featured products with more elaborate designs.

Stephen Ward, a commercial director of the retail consulting firm Conlumino, suggested that though there is a surge in competition, “the threat from the rise of specialists is more of an issue.”

Under Armour and Nike are great examples of brands that have historically targeted the male athlete, but recently, both companies have showed signs of diversification that included expanding its women’s line.

English: Kevin Plank, founder and CEO of Under...
English: Kevin Plank, founder and CEO of Under Armour (Photo credit: Wikipedia)

After investing in its womenswear business and signing high-profile endorsement deals with ballerina Misty Copeland and supermodel Gisele Bundchen, Under Armour saw a return of $600 million last year. Seeing the success generated, CEO of Under Armour Kevin Plank hopes to grow the segment to mirror that of the men’s side.

Nike’s approach calls for channeling investments into women’s-only stores. According to Bloomberg, Nike is anticipating the women’s business to surpass its men’s. By 2017, the business could grow to $7 billion, which would mark an impressive $2 billion increase from this year’s expected fiscal performance.

Lululemon suffered in one metric, but that did not stop the company from posting surprising first quarter gains. Revenue increased by 10 percent, outpacing previously expected earnings between $1.97 billion and $2.02 billion. Now revenue forecasts range from $2 billion to $2.05 billion.

The company’s e-commerce business also flourished in its most recent quarter, posting a 27 percent increase. The only downside to this fact is that online sales account for just 20 percent of total sales.

Altogether, Lululemon’s profits have significantly increased from a year earlier. Profits were listed at $19 million, and as of May 3, it is listed at $47.8 million.

The secret to Lululemon’s viability? The incorporation of global “brand and community” ambassadors. Chief executive Laurent Potdevin said that the ambassadors, who are involved in local sports, are utilizing sport-specific “technical” clothing that is relevant to that market’s climate conditions.

In addition to catering products to local markets, Lululemon has also experimented with a different customer base. The same metric that was in decline for women is on the upswing for men. Men’s-only stores were up 19 percent last quarter.

“In the right cities, we will continue to play with potential standalone stores as we see fit as long as it is in very close proximity to the women’s locations,” Potdevin said. “The one format that we are the most excited about right now is an expanded store where both men’s and women’s are located. Our female guest still shops a lot for him… We are seeing tremendous results.”

The athleisure market is an unequivocal boom for apparel companies, and as more enter the field, only the fiercest and most innovative will stand atop of the others.


Photo Credit: Via: Flickr/Elvert Barnes

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