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Lululemon Lays Out $12.5 Billion by 2026 Plan

Lululemon is racing for $12.5 billion in revenue by 2026, using its track record of success as a roadmap for growth.

The Vancouver yoga wear company expects a compound annual growth rate of 15 percent over the next four years and said it’s crossed the finish line early on several of its stated targets. It doubled both its men’s and digital businesses in two years instead of three and is on track to quadruple the size of its international business by the end of the year versus 2018.

CEO Calvin McDonald told Wall Street investors Wednesday that those results stand out when factoring in what Lululemon didn’t do during the pandemic’s darkest days. “We made investments in the organization, in our people, in our culture—we were leaders, and paying rent, and not cutting one order and pay protecting our employees,” he said, pointing out that Lululemon achieved strong financials despite waves of government-mandated store closures. “We stood up to [do] the right thing…and still achieve[d] these incredible results.”

Lululemon said it still has opportunities to do more in its bread-and-butter run, yoga, train and On the Move categories. Activity-specific categories including tennis, golf and hiking offer additional growth potential on top the footwear category it launched with one women’s style last month and three more slated for this year before men’s arrives in 2023.

China is on pace to be Lululemon’s second-biggest market in the next four years after North America, where revenues should grow by double digits this year, McDonald said. The company plans to open its first stores in “Spain, Italy and Thailand in the next 12 months,” he added.

McDonald described raw materials and product innovation as the “essence” of Lululemon and how the company separates itself from rivals.

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Consumers will supports brands at a “premium price point” because they know “what performs better,” McDonald said of why Lululemon prefers most expensive nylon over polyester.

Chief product officer Sun Choe said Lululemon is “constantly iterating, developing new materials and…looking to the future and investing in sustainable solutions via feel.” Product creation starts by focusing on the wearer’s activity, unmet needs, and how they want to feel, she added.

According to Choe, Lululemon is still in the “early innings” of its product journey for women’s, men’s and accessories. Our product pipeline is robust and we continue to leverage the science of field-to-field product newness and innovation,” she said.

The company will build stronger connections across physical and digital, and explore new areas such as Lululemon Like New, the trade-in and resale program expanding nationwide on Earth Day. It will focus on its Power of Three x2 growth strategy, developing locally relevant product. Engaging customers in Mainland China, as well as scaling and entering new markets across Asia Pacific and Europe, will be key to this strategy.