Lululemon isn't expecting a peaceful holiday shopping season
Feel free to go back to child's pose anytime... Investors aggressively dropped shares of Lululemon after Wednesday's earnings report — they're blaming the future, not the peaceful past:
- The 3rd quarter: Sales rose 17% at existing stores, and 23% overall because it added 53 new Lulus over the past year. All that, plus its profits, beat expectations.
- This quarter, aka this holiday season: Lulu gave investors a heads-up that it's expecting fewer sales than they do: $1.3B.
- The unhelpful clarification: The CEO blamed a late Thanksgiving, awkwardly reminding us that there are 6 fewer holiday shopping days this year than last.
Return to the top of your mats... where Lululemon's stock was enjoying a record high earlier this week. The brunch-worthy athleisure industry is fiercely competitive, but sizing up Lulu to Nike has begun (investment bank Cowen compares Lulu's growth to Nike's) — and since Nike is currently 5x as valuable as Lulu, shareholders appreciate the aspirational side-by-side.
Here's the secret to becoming the next Nike... Be a lifestyle brand. Lulu patented "Luon" and "Luxtreme," the technical fabrics that make yoga pants stretchy and sweat-proof. Now it's focusing on some serious lifestyle moves to differentiate itself:
- Stores with built-in yoga studios (like this 20K-square-foot giant in Chicago).
- Personal care products from deoderant to shampoo for post-shavasana shower routines.
- More focus on including guys, whose sales jumped 38% last quarter.
- And it calls its customers "guests" — seriously, CTLR + F this earnings report to prove it.