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Lululemon Looks Beyond Yoga Wear to Revitalize Sales

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Still saddled with troubles, retailer Lululemon Athletica Inc. is looking to expand its product offerings beyond its signature yoga wear to stimulate sales.

Speaking to a room packed with retail analysts in Vancouver on April 17, freshly minted Lululemon CEO Laurent Potdevin said that he planned to offer more casual wear, manufactured using some of the same fabrics that have made the company a favorite choice for athletic apparel. He said, “The recent success of our &Go capsule, which I’m sure you’ve seen, speaks to the elasticity of the brand. This lifestyle product collection resonated with our guests exceptionally well and will become an important part of our collection,” according to Reuters.

According to Potdevin, Lululemon will also broaden the consumer demographics it currently targets to include a more intense focus on men and young girls, whose apparel will be sold in Ivivva stores. Lululemon executives believe that the men’s line alone could generate $1 billion in sales annually and Ivivva could account for a half-billion dollars more.

Lululemon suffered a disappointing 2013, a fact chief financial officer Jon Currie conceded in January. “2013, that’s a year that we’re quite happy to see going behind us … the quality problems that we had earlier in the year were a real wake-up call. You always hear the phrase that any PR is good PR. What we learned is that’s not always the case. I just wanted you to hear that we’re taking it seriously. Like, we get it.”

The retailer infamously stumbled about a year ago, forced to recall its best-selling black “luon” yoga pant after it was discovered that the stretch fabric used to make it was too sheer. The luon pant shortage certainly left its mark; inventory at the end of that quarter equaled $163 million, in comparison to the previous year’s $125.4 million. Chief Product Officer Sheree Waterson was terminated because of the snafu. Then-CEO Christine Day unceremoniously resigned.

Matters worsened for Lululemon when its manufacturing problems were closely followed by a series of embarrassing public relations gaffes. As the retailer’s iconic yoga pants continued to attract criticism for inferior quality, specifically with regard to pilling, company founder “Chip” Wilson suggested the construction of the pants was acceptable, and that it was customers’ bodies that were to blame. He infamously remarked, “Quite frankly some women’s bodies just actually don’t work for it. It’s really about the rubbing through the thighs, how much pressure is there.” Unsurprisingly, a maelstrom of negative press ensued. As a result, Wilson relinquished his position as non-executive chairman of the board.

Top executives at Lululemon have described the principal focus of the retailer’s turnaround strategy as a renewed focus on product design. Recently, Potdevin said, “Going forward, we are refocusing the organization on being design-led, about getting back to our roots and inventing the future, and we are doing that by fostering and promoting the healthy tension between technical innovation, style, function, and beauty. There will be no compromising, and it will bring out the best in us.” Potdevin then anticipated the expansion into new product offerings. “There will be continued focus and investment in this area to ensure we’re building a product development platform that will allow us to unlock our full global potential.”

Tara Poseley, Lululemon’s chief product officer, discussed the new plan to invest in product development as a return to the retailer’s roots. She said, “Impeccable quality is deeply rooted in our DNA. We are laser-focused on ensuring we have a world-class quality supply chain and organisation to support our current business and product platform for continued global growth.” As we continue to build on the great work that has been done, we are seeing a constantly increasing level of our product meeting our very high quality standards.”

Potdevin discussed the prospects of a turnaround as a longterm objective, acknowledging that the retailer’s woes can’t be remedied immediately. Speaking to the possibility that adding more seasonal products is consistent with the current consumer appetite for variety, CFO John Currie said that the retailer won’t “have the depth to capture the demand in these categories in the first half of 2014.” He continued, “While we are actively pursuing our opportunities to chase and fast turn product which will help mitigate some of this gap, our ability to buy deeper to rebalance our assortment to this shift in guest demand is weighted towards the back half of the year.”

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