US Markets
Thursday, February 1st, 2024 3:12 pm EDT
Key Points
- Men’s Footwear Debut: Lululemon is entering the men’s athletic footwear market by launching its first men’s footwear line, featuring a casual sneaker named “cityverse” and two new running shoes. This move represents the company’s initial foray into men’s footwear, aligning with its broader strategy announced in April 2022 to double its men’s business and achieve a revenue target of $12.5 billion by 2026. The cityverse sneaker is set to launch on February 13, followed by the introduction of the new running models in March and May.
- Growth Strategy Amid Competition: Lululemon’s expansion into men’s footwear comes at a time when the company is experiencing a slower growth rate compared to previous periods, facing intensified competition from both established players like Nike and newer entrants such as On Running. Despite a 19% increase in sales for the three months ending October 29, down from a 28% spike in the year-ago quarter, Lululemon aims to maintain its position as a best-in-class retailer. However, some analysts anticipate a moderation in growth as the company matures and sector-wide demand slows. HSBC recently downgraded Lululemon, citing expectations of a narrower performance gap compared to other retailers as demand decelerates.
- Strategic Importance of Men’s Footwear: While Lululemon acknowledges that its growth strategy is not solely reliant on footwear, the expansion into men’s footwear is considered a significant move. Lululemon’s Chief Brand Officer, Nikki Neuburger, emphasizes that apparel remains the “juggernaut” and “core” of the overall business. Nevertheless, entering the men’s footwear market is seen as a way to gain a competitive edge against industry giants like Nike, Adidas, Hoka, and On Running, all of which have made men’s footwear central to their core offerings. Lululemon aims to differentiate itself through innovation and a strong brand name, leveraging proprietary technologies and an innovative design approach not found in other brands’ entire product assortments. The company believes that this distinctive approach will set it apart in the highly competitive athletic footwear market.
Lululemon has unveiled its inaugural men’s footwear line, including a casual sneaker named “cityverse” and two new running shoes, marking the retailer’s entry into the men’s athletic footwear market. The cityverse will be launched on February 13, while the running models are set to debut in March and May. This move is part of Lululemon’s broader strategy, announced in April 2022, to double its men’s business and achieve a revenue target of $12.5 billion by 2026. While the foray into men’s footwear is considered a significant growth pillar, Lululemon’s Chief Brand Officer, Nikki Neuburger, emphasized that the company’s growth strategy is not solely reliant on footwear, characterizing the launch as “icing on the cake.”
As Lululemon faces a slower growth rate compared to previous periods and heightened competition in the athletic apparel sector from established players like Nike and newer entrants such as On Running, the introduction of a men’s footwear collection is seen as a strategic move. Despite a 19% increase in sales for the three months ending October 29, down from a 28% spike in the year-ago quarter, Lululemon is still regarded by most of Wall Street as a best-in-class retailer. However, HSBC recently downgraded Lululemon to a “hold” rating from a previous “buy” rating, anticipating a narrowing performance gap compared to other retailers as demand in the sector decelerates.
Neuburger emphasized that, while apparel remains the “juggernaut” and “core” of Lululemon’s business, the expansion into men’s footwear positions the company competitively against industry giants like Nike, Adidas, Hoka, and On Running. Lululemon CEO Calvin McDonald highlighted that the brand’s awareness among men is relatively low, providing room for growth. To differentiate itself, Lululemon aims to stand out with innovation and a strong brand name, leveraging proprietary technologies and an innovative design approach not found in other brands’ entire product assortments. The company believes that this distinctive approach will give it a competitive edge in the fiercely contested athletic footwear market.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/01/lululemon-to-launch-first-mens-footwear-line.html
