This week apparel brand Lululemon announced a big move: it's getting into the shoe game.
The first-ever Lululemon shoe, targeted at women, will put Lululemon directly into competition against industry giants like Nike and adidas — both of which sell billions of dollars of footwear every year.
It's all about brand
High-end athletic apparel is mostly a marketing game - and it's one that Lululemon is incredibly good at. Convincing someone to buy a $100+ pair of yoga pants, or shoes, that likely only cost a fraction of that to make, requires some serious brand power.
For Lululemon that brand power shows up in their financial results when compared to their peers Nike, adidas or Under Armour.
The latest full year financials show that Lululemon makes the highest operating profit margin of any of those companies, translating every $1 of sales into around $0.19 of profit. That's better than the $0.16 that Nike churns out, and roughly double what adidas and Under Armour make.
Will that branding prowess translate smoothly from $100 yoga pants into $140 shoes? Time will tell.
