Lululemon Athletica Inc. built an active performance brand based on technical product innovations, and now it is looking to build out its repertoire into other categories.
The company has already taken its technical fabrications know-how from what was a yoga-focused brand, to outerwear, bras and the day-to-day apparel line known as office travel commute. But there are two other strong categories for growth potential–men’s and bottoms–that company executives spoke about during their conference call to Wall Street Wednesday afternoon after the company posted fourth-quarter results.
“Men’s is one of our largest and most exciting areas of future growth, both for our current and new guests going forward,” Calvin McDonald, chairman and chief executive officer, told analysts. “We recently launched two types of boxers. And this spring, we’ll expand our Fast & Free franchise into men’s as we further leverage Nulux to offer men a new solution for warm weather runs. And we remain excited about the Selfcare, given the strong response to our tests. We believe this category holds great opportunity for us and is a natural extension for our brand.”
Fast & Free is a Lululemon line that features the company’s Nulux fabric, which is described as quick-drying and sweat-wicking to allow the wearer to “run freely.” Selfcare is the personal care line for athletes.
In other categories, McDonald said the company’s “bottoms category continues to perform exceedingly well and has proven to be a strong acquisition point into our brand for both women and men.”
“We saw strength in both men’s and women’s bottoms, which comped up 28 percent and 21 percent, respectively,” chief operating officer Stuart C. Haselden, said. “Our expanded outerwear offering also performed well with strong guest demand for our new cold weather styles.”
As for the men’s business, Haselden noted its strong growth potential for the company. “It’s growing faster than our women’s business. Our men’s pants has been one of the fastest growing categories within men’s. It’s become an important way in which we acquire new guys to the brand. And at this point, it’s larger actually than our performance tops business, which had, prior to last year, had been the largest category.”
He also noted a considerable increase in the brand’s “small outerwear business [was] in men’s,” which was another indication of how big the men’s business could be.
“So we’re excited to introduce new styles in outerwear as well as in our performance business. And we’ll have a nice balance between our technical performance style as well as our-what we call-office travel commute styles, outerwear among them. So there’s a lot of runway for us to continue to grow our men’s business. We’re just over 20 percent penetration today. We really believe that Lululemon can be a dual-gender brand, and that our men’s business can ultimately be as big as our women’s,” Haselden said.
Addressing co-locations in connection to the men’s business, Haselden said stores that are too small to house apparel for both genders can have a second location close by to provide a more cohesive presentation of the men’s product, not to mention an environment more appealing for men to shop.
Lululemon, it seems, isn’t against against the idea of making the men’s stores larger where appropriate. Haselden spoke of the Mall of America location, where the square footage was expanded to 5,000 square feet from 3,000 square feet.
“We doubled the size of our men’s shop there, and we saw our sales in men’s up 80 percent, with essentially the same inventory. Now every co-located expansion is not that successful, but that’s a good example of the success that we’ve seen. But it is an important part of the story for men’s and our North American store footprint broadly. And we’re still testing just how deep we can go in the portfolio with our strategy,” Haseldon explained.