It’s been dubbed a cult and its followers, colorfully clad in moisture-wicking spandex, “Luluheads.”
Lululemon Athletica, the ultrahip and ultrahot yoga-inspired activewear company, has also been ultrafeminine, but Christine Day, the firm’s chief executive officer, thinks it has room for men, too. Last year, when sales rose 57.1 percent to $711.1 million, men’s accounted for about 12 percent of the total, a figure the firm would like to elevate to between 15 and 17 percent. And even though profits more than doubled to $121.8 million, it’s still not getting much love from analysts, who’ve attached seven “buy” ratings to it versus 10 “hold,” one “sell” and three “underperform.”
One male is apparently already on board: CNBC pundit Jim Cramer called Lululemon “a high-octane secular growth story.” Day recently sat down with WWD to discuss how her brand can win the hearts and minds of the male consumer, as well as the male analyst.
WWD: Many of your naysayers in the analyst community happen to be men. Do you feel that guys don’t relate to your brand and, if so, why?
Christine Day: I definitely see that with male analysts. It’s funny to hear men in Armani suits saying we have a high price point. Women’s jeans are at least over $100. Guys don’t get that logic. A lot of male analysts tell me: “My wife loves Lululemon, but I don’t get it,” but once you get them in the product, they get it.
WWD: How do you hope to attract the male customer?
C.D.: I think the way a guy gets introduced to our product is the first piece is as a gift, and then he loves it. Usually, his girlfriend, spouse, significant other actually tells them they look nice in it and they let them wear it because it doesn’t stink. Or he may come in with the guise of buying a gift, and then pretty soon he’s buying for himself. Men really recognize the quality and the performance of the garment, and I think that’s the right way in our model to do it. We’re never going to compete with signing contracts with any of the big male athletes because the whole endorsement and sponsorship industry is a whole other animal from Lululemon. The way we do it allows us to be a premium niche. But our primary focus has to be women’s. We have the clear opportunity to be number one in that, and we don’t want to dilute that opportunity.
WWD: Is there a difference in selling to a man versus a woman?
C.D.: The way a guy works out is running and fitness at a gym, but he wears whatever his last uniform was and that’s who he associates with. But the truth is they mainly work out at gyms. So when you actually put on our quality garments, and they are designed for fitness, not your basketball shorts that you’re wearing at the gym, our guest responds to that and goes, “I have to have more of these because it actually works with what I’m doing.” Men wear what they associated themselves as an athlete in, but then eventually when you realize you are running on a treadmill and/or doing weights, the basketball shorts get in the way. The perception of what looks cool versus what functions is part of their identity, which is why that marketing program of endorsement for those athletes, that hero worship, works for men, but it doesn’t work for women.
WWD: How did you realize this? Did you learn this working as an executive at Starbucks?
C.D.: Howard Schultz [Starbucks chairman and ceo] never believed in market research. If you wanted to irritate him, you’d show him a market research study. If you are trying to build a space that isn’t, no facts exist. That’s what innovators do. They take a space that’s empty. There’s nothing in evidence that proves something is going to work, and they encourage pursuing the empty space. At Lululemon, we watch what people do. Statistics will tell you one thing, but behavior is not a number. That never shows up in customer market research.
WWD: Under Armour is making a major push to grab share in the women’s activewear apparel market. What do you think of their merchandise?
C.D.: They pink it and shrink it.
WWD: Who do you view as your biggest competitor?
C.D.: Fragmentation is our biggest competitor — not someone doing it from a lower price point.