iStock.com/FinkAvenue
Lululemon Athletica posted its 14th straight quarter of double-digit same-store gains since the pandemic’s arrival and remains one of retail’s breakout darlings as the yoga-themed retailer celebrates its 25th anniversary.
The strong recent performance came despite the challenges faced selling upwards of $100 leggings amid inflationary pressures.
A 2012 article from the Wall Street Journal identified “scarcity” as Lululemon’s “secret sauce.” New colors and seasonal items arrive in three-, six-, or 12-week life cycles with the threat of out-of-stocks supporting full-price selling. Lululemon’s CEO at the time, Christine Day, told the WSJ, “Our guest knows that there’s a limited supply, and it creates these fanatical shoppers.”
Speaking recently to Yahoo Finance, Adrienne Yih, Barclays’ analyst, likewise identified Lululemon’s “secret sauce” as the continued commitment by the current executive team, led by CEO Calvin McDonald, to innovation over three-, four-, and five-year time frames. She said, “They never stop innovating. They never think they have enough. They never think they're winning enough.”
On its third-quarter analyst call, McDonald highlighted a number of successful new fabrications and products driving sales in the latest quarter as well as those planned for coming quarters. He said, “One of our competitive advantages is our ability to consistently bring newness and innovation into our assortment. Our product teams work with our athletes and ambassadors, leverage our Science of Feel innovation platform, and solve for the unmet needs of our guests.”
As usual, McDonald also called out Lululemon’s efforts to “continue to lean into our grassroots approach to building community and engaging with guests on a local and one-on-one basis.”
At its analyst day last year, Lululemon detailed the grassroots approach that includes training in-store “educators” to discuss products and guide customers to local studios, signing up fitness trainers and yoga instructors as local ambassadors, and supporting community events. Partnering with local studios is a core driver of its recently launched Essential Membership program.
Nikki Neuburger, Lululemon’s chief brand officer, said at the event, “Strong relationships have been a critical ingredient of our secret sauce since the early days of the brand. It started in our stores and now membership will allow us to do the same digitally and at scale.”
McDonald on the company’s third-quarter call said that as U.S. adult active apparel revenues decreased in the third quarter, Lululemon gained 1.5 points of market share, according to Circana’s POS data tracking. He said of the North America opportunity, "With unaided awareness of only 25%, we have several ways to bring new guests into the brand, including ongoing innovation within our product assortment, new store openings and optimizations, and our unique approach toward connection, encompassing both local activation and larger-scale marketing campaigns."