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Retail Expert: A Lululemon Footwear Business Could Surpass Apparel Business If Done Right

Retail Expert: A Lululemon Footwear Business Could Surpass Apparel Business If Done Right
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Coming off a stellar first-quarter report, Lululemon Athletica, inc. (NASDAQ: LULU) has emerged as a clear winner in the athleisure era.

Shares of the apparel brand are up nearly 59 percent year-to-date and have more than doubled over the past year amid several PR missteps and the resignation of its CEO.

Matt Powell, vice president and senior industry advisor at NPD Group, said Lululemon is untouchable among upscale athletic apparel brands.

“They had to really work through some of the problems they had," Powell said, naming see-through tights, bad PR and a crowded womens athleisure field as examples.

One of Lululemon’s strengths is that its affluent and aspirational core demographic is desirable in today's environment of consumerism, Powell said.

“They are fashion-conscious and label-conscious and focused on fitness and health as a lifestyle. It's a very powerful combination when you have those things lining up.”

Opportunity In International, Men's Businesses

When Lululemon's success became visible, other brands jumped into activewear and crowded the space, Powell said. Lululemon has since solidifed itself as a leader in the space, with room to grow in men's and international, he said.

Lululemon has "some great runway" in men's apparel and is the largest women's apparel brand in Canada, Powell said.

"There is great potential for them outside the U.S. and Canada."

The retailer said it plans to open 15-20 stores in Asia in 2018.

While many "guy-oriented" brands have made vigorous attempts to capture the women’s side of the business, they continue to fail, Powell said, alluding to it being easier for a female-oriented brand to capture the men’s side of the business than vice versa.

A Lululemon Footwear Business Could Surpass Apparel

Lululemon holds a tremendous opportunity in footwear that could potentially eclipse its apparel business if the right customer is reached, Powell said.

"With the sensibility of the brand and their extremely loyal following, they could use that to their advantage,” he said.

Starting a shoe business is difficult, but Lululemon could start its own or potentially acquire an existing brand — and its approach would likely be much more focused and targeted than Under Armour Inc. (NASDAQ: UAA), which has made a largely unsuccessful push into footwear, in the industry expert's view.

“It is hard to start a footwear brand, but not impossible. Under Armour is frankly doing too many things. They have too many irons in the fire. I would guess Lululemon would be much more focused in footwear."

Related Links:

Sell-Side Bullish On Lululemon, Stock Rallying After Q1 Earnings, Sales Beat

Lululemon Is Gaining Men's Approval, China Is Growing Rapidly

Public domain photo via Wikimedia.

Posted-In: Athleisure Matt Powell NPD GroupAnalyst Color Top Stories Exclusives Interview Best of Benzinga


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