Lululemon Athletica Inc. is manning up to the competition.
To flaunt more of its masculine side, the $1.7 billion, yoga-inspired athletic apparel company has begun putting up dual-gender “flagships” and on Black Friday opens its first men’s-only store in Manhattan’s SoHo.
“We do expect our men’s growth to continue to outpace our overall growth for the next few years,” said Felix del Toro, senior vice president and general manager of Lululemon Men’s. “We see the opportunity for men approaching $1 billion in revenue over the next few years and are investing accordingly to bring that vision to life.”
No additional men’s-only stores are set at this point. Men’s wear accounts for 13.5 percent of the volume of each store, and occupies about 15 percent of the space. Men’s, representing 17 percent of the assortment, is believed to be about a $300 million business for Lululemon.
“I understand some people think of us as a women’s brand, but we’ve been in the men’s business for a long time — almost from the beginning,” said Delaney Schweitzer, the company’s executive vice president of global retail operations.
Even as it expands in North America, Lululemon — with 270 stores in the U.S., Canada, Australia, New Zealand and the U.K. — is about to broaden its footprint overseas. “The big thing for us will be getting into Asia and Europe,” Schweitzer told WWD. “We are opening our first store in Singapore in mid-December. In Hong Kong, we are close to finalizing a deal for next year.”
The company will open its second London store in late November in the Chelsea area. The first opened in Covent Garden. The international plan calls for company-owned stores initially, though joint ventures are possible in the future, Schweitzer said. The eight stores in Australia were originally joint ventures before converting to company-owned.
Del Toro said Lululemon will enter new international markets “with equal excitement for the men’s and women’s areas of the business.”
Decisions on retail sites are based on months of market research via “showrooms,” which Schweitzer described as “small, off-the-beaten path locations, operating three days a week with tight assortments.” There are 92 showrooms operating. Athletes and other “influencers” get invited to the showrooms to experience the product and help Lululemon gauge whether the concept and product resonate. Showrooms, typically 1,000 to 1,200 square feet compared with Lululemon stores at 3,000 square feet on average, operate for at least a year to see if the market is right for a bona fide store. With showrooms operating in Germany, Amsterdam, Scotland, Hong Kong and Singapore, Schweitzer suggested Lululemon is embedded enough in some communities to advance the retail agenda.
The showroom strategy hasn’t led to steady overseas retail development, at least so far.
“The real challenge has been getting the right people on the ground and being able to really dig into what each local market is looking for, from an assortment perspective and getting the right real estate,” Schweitzer said. “We know there is a guest out there. They have found us on the dot-com or shopped our stores in New York,” among other large North American cities attracting foreign visitors. “We get deeply rooted in a community before we open a store. We know this is a differentiator for us.”
Asked if assortments would vary in different countries, she replied, “I don’t see much difference, except in Singapore where it’s hot all year round. There will be a much different assortment there.”
In recent seasons, Lululemon has faced intensified competition in the ath-leisure/yogawear category from such players as Gap Inc.’s Athleta, Nike and Under Armour as well as from specialty stores and department stores. Beyoncé Knowles and London-based Topshop have formed a joint venture company, Parkwood Topshop Athletic Ltd., to produce an athletic streetwear brand that could launch for fall 2015 at the earliest.
Lululemon has been confronted with lower traffic, comparable-store sales and margins, and has dealt with product issues, ranging from its recall of some overly sheer yoga pants in early 2013, to figuring out a proper balance between fashion and core items. The stock price has swung from a high of $72.22 to a low of $36.20 over the past 52 weeks, and is down about 30 percent this year.
Disagreements between founder Chip Wilson and certain members of the board further impeded progress. Wilson sold half his stake in the company to private equity firm Advent International, which got two seats on the board. He stepped down as chairman this year, but remains a director. Three months after the yoga pant problem, Christine Day, the chief executive officer who orchestrated much of Lululemon’s explosive growth, left the company.
Still, Lululemon is perceived as a continuing growth story and pioneered the ath-leisure trend years before other retailers caught on to its potential. The company was founded in 1998 and shared its first retail space with a yoga studio in Vancouver where it is based.
Recently, Duke Stump, formerly of Nike and Easton Sports, was named to the new post of executive vice president of community and brand, reporting to Laurent Potdevin, ceo. Stump will be responsible for “continuing to build an authentic and differentiated global brand and community experience, and amplifying Lululemon’s global impact,” the company said.
The new format calls for about 5,000 square feet to accommodate women’s and men’s products, and separate entrances and decor for the men’s and women’s departments, helping to create different shopping experiences. In August, the first flagship opened on Robson Street in Vancouver. The second will open in Santa Monica, Calif., on the Third Street Promenade, on Nov. 25.
Another flagship is set for Lincoln Road in Miami, and potential flagships in Toronto, New York and other cities are being eyed. “Each one will look very different in each market,” Schweitzer said, adding that there’s no set goal for how many flagships will open.
The SoHo men’s-only store, opening Nov. 28 at 127 Prince Street and Wooster, will be directly across the street from a women’s-only unit, set to open in late winter 2015. Within the 1,600-square-foot men’s space, part of the assortment will be products exclusive to the location. There will also be some special services like personalizing shorts, called the Joinery, offering three liners and four shells. “You pick the liner and the shell you want and we sew it right there,” Schweitzer said, noting a seamstress will be on the premises. Depending on the workload, you can pick up your shorts then and there, or return another time. The Robson flagship also offers personalization.
With the emerging men’s program, Lululemon’s challenge will be to overcome its strong identification as a women’s brand. There’s also an assumption that many men are less choosy about athleticwear, feeling they can get away with less expensive products. They’re also less inclined to wear athletic products in as many settings as women do.
Lululemon’s men’s wear includes running jackets with reflective panels, zipper vents and soft-shell fabrics to repel rain; pullovers with “antistink fabrics” to inhibit the growth of odor-causing bacteria on the shirt; perspiration-wicking Polartec jackets, and pants geared for performance and all-day comfort. Among the current bestsellers: the ABC pant, the surge short and the metal vent tech short sleeve. The SoHo men’s-only store will display an expanded assortment from what Lululemon offers, though no details on new products were available.
The store will evoke what Del Toro described as “a workshop environment” where guys will hang out and not just shop and leave quickly. There will be a large “community table” for chilled beverages, mobile payments, and a sound and digital projection system. The fit rooms are designed in metal and opaque glass, in a nod to classic industrial New York. Lululemon, working with the New York-based architecture firm MNA, designed the store.