Apr 25, 2019
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Lululemon bets on product innovation, expansion for 5-year growth plan

Apr 25, 2019

Lululemon Athletica Inc. may have ended 2018 with $3.3 billion in sales, but the company plans to grow far beyond women's yoga pants by 2023.

Lululemon bets on product innovation and expansion for 5-year growth plan. - Facebook: Lululemon

The Vancouver, British Columbia-based company unveiled on Wednesday a new group strategy that will fuel its growth over the next five years, which includes plans to double men’s and digital revenues, and to quadruple international revenues. 

“We’re ready to build upon our success and embark on the next phase of growth at Lululemon to realize the full potential of our brand,” said CEO Calvin McDonald. “We believe Lululemon has a unique opportunity to push beyond traditional expectations to develop innovative products and become a fully experiential brand that creates compelling experiences for guests who want to completely live into the sweatlife.”

The word “opportunity” was used repetitively during the company’s investor meeting on Wednesday; opportunity for fabric innovation, opportunity for omni-channel guest experiences, and opportunity for continued market expansion, among the many other factors the company believes will help fuel success and reach its goal of total annual revenue growth in the low teens for the next five years.

Among its ongoing product innovation plans, Lululemon emphasized growing its men's offering, selling products that go beyond yoga. The company will focus on growing its offerings for runners, as well as strength training, with products designed with increased support and technology, specific to each sport.

Likewise, Lululemon will also home in on its accessories line including fitness rollers and accessories such as bags and training gloves. The company also announced plans to expand into footwear.

As of June, Lululemon will roll out its self-care line to 50 stores, which includes items like deodorant, dry shampoo and lip balm, and is optimistic about the potential of this latest offering.

The company’s guest experience - an important component of the brand’s success - will be amplified over the coming years to again serve customers beyond yoga and to be better represented across all channels. With plans to more than double its digital revenues by 2023, the company said it will focus on inspiring, provoking and celebrating guests both online and through in-store experiences.

Lululemon’s loyalty membership program, which is currently being piloted in Edmonton and Denver, is expected to help that growth. The program provides members with exceptional perks like fitness classes, exclusive product access and other perks for an annual fee.

The company has already announced plans to open a 25,000 square-foot experiential store in Lincoln Park in Chicago in July 2019, complete with yoga studios, meditation space, healthy juice and food, and areas for community gatherings - embodying its experiential brand ambitions. 

Meanwhile, it is also looking internationally to help reach its goals, but believes that considerable growth potential remains in both the U.S. and Canada by leveraging its store formats, digital experience, and community connection.

Internationally, expanding across China, as well as the APAC and EMEA regions, will be continued areas of focus for the company, it said.

“Lululemon is purpose-driven and is positioned well to continue to inspire guests living the sweatlife across multiple experiences,” McDonald added. “We believe we are operating from a position of strength as we invest in creating dynamic experiential moments for our communities to connect and come together.”

Looking ahead, the company is expecting to see first-quarter net revenue in the range of $740 million to $750 million, based on a total comparable sales increase in the low-double digits on a constant dollar basis. Diluted earnings per share are expected to be in the range of $0.68 to $0.70 for the quarter.
For the full fiscal 2019, Lululemon expects net revenue to be in the range of $3.7 billion to $3.74 billion, based on a similar low-double digit comparable sales increase on a constant dollar basis. Diluted earnings per share are expected to be in the range of $4.48 to $4.55 for the full year.

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