NEW YORK — At Lululemon Athletica, it all started with women’s yoga pants. But as the ath-leisure brand continues to experience rapid growth, the company is expanding seemingly everywhere, from men’s wear to international to fashion label.
“We really are in the early innings of our full potential,” Calvin McDonald, Lululemon’s chief executive officer, said during Wednesday’s analyst day here, the company’s first in five years.
“We have great momentum in this business,” McDonald said. “We have an opportunity to do even more. And the trends that are happening in the industry are creating those tailwinds that are helping us. It’s not just one trend in the industry. It’s not a fashion trend. It’s not about casual Fridays that are driving this business. What’s driving this business are a multiple number of trends that are core to how guests and consumers are thinking and choosing brands today.”
The game plan includes doubling revenues in the men’s wear category in the next five years — an ambitious plan for a company that started two decades ago selling women’s yoga pants — as well as doubling its digital growth and quadrupling international revenues by 2023.
“Even as successful as 2018 was, even after 20 years, myself and this leadership team, and the entire organization is energized with the potential ahead,” McDonald said. “The opportunities outnumber our strengths two to one.”
McDonald said he wasn’t going to waste analysts’ time discussing Lululemon’s strengths during Wednesday’s event, because “everyone in this room is well-versed on what has driven the success.”
But it can be summed up with a stock price that is up nearly 80 percent year-over-year and sales that increased 21 percent during the most recent quarter, compared with the year prior, reaching $747.7 million. The Canada-based company has previously set a revenue target of $4 billion by 2020. Also on Wednesday, Lululemon released its annual executive compensation summary in an SEC filing, with McDonald taking home a paycheck of roughly $17 million a year. That’s more than four times the amount former ceo Laurent Potdevin made.
Meanwhile, while other retailers continue to shutter stores, Lululemon opened about 20 brick-and-mortar units in the last year, many of them abroad, and has plans to open even more. In July, the company will open a 25,000-square foot store in Chicago. Aside from offering Lulu’s signature women’s yoga pants — still the company’s number-one seller — the location will have space for yoga and meditation and an expanded selection of men’s wear, in categories like run and train.
Lululemon’s ability to convince shoppers to drop $100 on a pair of yoga pants is well-noted among retail executives and on Wall Street. But McDonald wants to focus on what lies ahead.
“In particular with men,” he told analysts. “We have very low brand awareness with men. The opportunity to just be known and therefore to have [male consumers] just consider us, to choose us, to see the product in our assortment that we offer for them in their needs in both sweat [category] and to-and-from [category], is significant.”
Earlier this year Lululemon unveiled a collaboration with men’s wear designer Robert Geller. The 12-piece capsule collection was unveiled during February’s New York Fashion Week: Men and will go on sale this May.
“We’re really trying to get over the idea that Lululemon is a women’s brand,” Sun Choe, Lululemon’s chief product officer, said Wednesday. She added that the Geller collection not only upped the ath-leisure brand’s fashion relevance, but also created a new aesthetic for men that plays off the current streetwear trend.
Lululemon shoppers can expect to see an expanded assortment across both men and women’s categories in things like bras, footwear, bags and socks in the coming year. Choe said Lululemon is hoping to one day be as big in bras as it is in yoga bottoms. Meanwhile, the company will increase its Asia Fit selection, which currently comes in a limited assortment. “We can’t keep them in stock,” said Stuart Haselden, chief operating officer and executive vice president of international.
There is also the launch of the company’s self-care cosmetic products, which include deodorant, dry shampoo, lip balm and facial moisturizer.
The products, which will roll out to 50 stores in June as well as online, were tested in 17 stores last fall. “What we learned,” Choe said, is that the consumer, “really looks to us as the experts and authority on sweat.”
The sweat life, it turns out, seems to be a growing global phenomenon, one that McDonald estimates is worth around $3 trillion. That could be why Lululemon is investing heavily in new stores and digital channels abroad. In the first half of this year, the brand has revamped its web sites in Korea, Japan, China, France and Germany.
“It unlocks the ability to be able to engage with our guests in their local language, to hold relevant content and also unlocks the potential for more sophisticated systems,” said Haselden, who added that the company will continue to leverage platforms like WeChat in China to increase its exposure.
Choe also pointed out that collaborations, like the Geller tie-up, have a lot of reach in Asian and European markets, two important growth opportunities for Lululemon.
Regardless of the market, McDonald said emphasizing the sweat life is the heart of the brand.
“We are always going to be rooted in athletic wear,” he said. “We’re athletes designing for athletes. We go out and sweat every day. And our technical performance is what we’re focused on. Performance will always be in trend.”