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Profits soar for yoga-wear maker Lululemon

Sally Herships Jun 10, 2011
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Profits soar for yoga-wear maker Lululemon

Sally Herships Jun 10, 2011
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Tess Vigeland: For a retailer specializing in downward dog-wear, Lululemon is trending upward in just about every other way. The Canadian yoga- and activewear company reported stronger than expected earnings today.

Meanwhile, many of its U.S. rivals are struggling to regain pricing power with consumers. Sally Herships looks at what the niche retailer will have to do to keep up its warrior pose.


Sally Herships: Yoga positions can be challenging, and so can yoga prices. A pair of Lululemon’s popular Groove pants runs over $100.

Mary Lou Quinlan is CEO of Just Ask a Woman, a marketing company specializing in female consumer behavior. She says Lululemon can command high prices because it’s an aspirational brand in a category that used to be practical.

Mary Lou Quinlan: The real reason, the whole truth of why women buy it: the gorgeous fashionability. The cachet of looking like a really cool workout person, and the fact that that terrific fabric makes your butt look good.

Lululemon has stretched its product line well beyond the yoga studio to jackets, underwear and hats. But it’s kept its corporate waistline trim through careful growth.

Shira Sue Carmi: If you actually look at the footprint of the company, it’s tiny.

Shira Sue Carmi is founder of Launch Collective, a retail industry consulting firm.

Carmi: So they have 81 stores in the U.S. And if you compare it to something like J. Crew, who has 300 stores — not to mention Gap that has 3,000 — you see that the growth opportunity is enormous.

Carmi says the yoga apparel industry is worth about $6 billion a year. But she says Lululemon is well poised to grab a bigger share of the $15 billion market for all types of women’s activewear. The company’s employees are living advertisements for the brand.

Carmi: They go to yoga classes together. They have this culture of activewear, of wellness around it that then extends into the customer.

Lululemon says it’s planning to open 30 stores in the U.S. and Canada by the end of this year.

In New York, I’m Sally Herships for Marketplace.

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