Dive Brief:
- After exceeding $6 billion in revenue for the first time — and overtaking Under Armour — Lululemon on Wednesday announced its plan to double revenue over the next five years to $12.5 billion. For reference, that's about $10 billion less than Adidas made last year.
- In order to do that, Lululemon is essentially repeating its Power of Three strategy (it is in fact called Power of Three x2), with plans to once again double its men's business, double its digital revenue and quadruple its international revenue by 2026.
- At the same time, the company's women's business, stores and North America operations are all expected to grow by double digits.
Dive Insight:
In 2018, Lululemon made just $3.3 billion, nearly doubling its revenue over the next three years. Now the company is poised to double its revenue once again by 2026, relying on the same core growth drivers: men's, digital and international.
Lululemon executives in a presentation Wednesday highlighted that product growth is also underway, with the company expecting to not only grow its core categories like run, train and yoga, but also take advantage of new opportunities in tennis, golf, hiking and footwear.
"We are making gains into these activities and we are making gains with credible elite athletes," CEO Calvin McDonald said. "And a category like footwear just helps us drive that credibility ultimately back to our core, which is incredible apparel that performs and performs better than any other alternative that's out on the marketplace today. It's all about growing our core."
Tennis and golf-focused collections already launched this spring, and a hiking-specific collection will launch over the summer. Chief Product Officer Sun Choe noted that 40% of the company's customers hike and a quarter of its men's customers play golf, leaving Lululemon with the opportunity to grow its offering for those activities. So far, the response to its running shoe, which launched in March, has been "phenomenal," Choe said.
While expansions like footwear were known to be in the works, Lululemon on Wednesday also gave some long-awaited insight into its plans for Mirror. The athletic brand plans to launch a two-tiered membership program this year, which includes a free version with benefits for all customers — McDonald said the goal is to get all customers to sign up for that one — and a "pinnacle membership experience" that includes workout content to stream and also integrates with physical Mirror studios.
"The vision was always about connection and community with Mirror and the opportunity to build a membership program that is truly unique and different and experiential," McDonald said.
The pinnacle membership experience will give customers access to content from Mirror instructors as well as fitness studios that Lululemon is partnering with later this year. The company is launching a connected fitness platform called Lululemon Studio that includes partners like Pure Barre and Dogpound and should add 800 additional hours of content to the Mirror platform. With the membership, customers can get discounts to live classes and benefits like early access.
The "essential membership," which is what Lululemon is calling its free loyalty program, will feature benefits for shopping, as well as access to monthly events and experiences.
via https://www.aiupnow.com
Cara Salpini, Khareem Sudlow
