What Is Lululemon Doing Differently?
Last year was a difficult one for athletic retailer Lululemon Athletica inc. (NASDAQ: LULU) as the company struggled with quarrels among top execs and worries about its business model. Product recalls caused the company to loose some of its clout with customers and shares finished the year down more than 5 percent.
However, many investors are taking a second look at the retailer in 2016, saying this could be a turnaround year.
Athletic Wear A Huge Market
One reason Lululemon is on investors' radars is the soaring popularity of yoga-inspired clothing. Casual wear appears to be shifting from jeans and t-shirts to yoga-pants and chunky sweaters. Jeans sales have fallen 6 percent since 2013, and analysts are predicting that the athletic wear market will increase from $80 billion to $100 billion by 2020.
With Lululemon already a customer favorite, many believe that investing now could be a smart move.
The company has been plagued by inventory management issues that caused inventory to rise faster than sales. However, over the past year the firm has invested heavily in correcting those issues by improving its supply chain and shifting its shipments from air freight to sea. Those changes are expected to cut down on costs and boost the company's margins in 2016.
Lululemon is also working to expand its customer base in the coming year. The company has a huge female following, but has been working to promote a menswear business in the new year. So far, Lululemon's men's clothing appears to be gaining popularity, something that analysts believe could be a money maker going forward.
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