Lululemon has been one of the most successful companies to translate pre-pandemic to post-pandemic prosperity.  While some of this has been due to style trends favoring athleisure wear over business casual for work-from-home, the company has also made several successful strategic decisions to support this growth.  In today’s Insight Flash, we leverage the online/offline channel breakouts available in CE Transact US and CE Transact UK transaction data, as well as the Men’s vs. Women’s product categorization available in CE Web, to better understand the drivers of this growth.

In both the US and UK, Lululemon’s success has far outpaced the Footwear/Athletic Apparel subindustry.  This confirms that the company is succeeding well ahead of any underlying fashion or lifestyle trends that are driving athleisure growth.  In the US, growth was over 2x the subindustry rate every month in 2019.  Since June 2020, when the company returned to positive growth even as the subindustry y/y remained negative, growth has been 3-4x the subindustry every month, including several months where Lululemon’s growth was positive and the subindustry’s was negative.  In the UK, Lululemon’s 2019 growth started at almost 50% in January, decelerating to still-strong double digits through September, and remaining positive until the pandemic.  Given Footwear/Athletic Apparel growth was flat through June 2019, Lululemon’s outperformance versus the subindustry narrowed as growth decelerated, but still indicated more than just a following of broader trends, especially as subindustry growth turned negative in July while Lululemon growth remained positive.  As in the US, the company did see much faster growth versus the underlying subindustry once the pandemic hit.

US & UK Spend Growth vs. Industry

Lululemon’s ability to ramp up e-commerce was a clear driver of its pandemic success.  In 2019, online sales grew at about the same rate as offline sales in the US, and underperformed offline sales in the UK.  Beginning in April 2020, however, online sales took off in both countries – 2.2x online sales in January 2019 in the US and 1.6x online sales in January 2019 in the UK.  Although online sales peaked for both countries during the holidays in December, in January 2021 Lululemon still saw online sales over 2.5x the level that they were two years ago in both the US and the UK.  Meanwhile, US offline sales were flat versus January 2019 and nonexistent in the UK due to mandated store closures.  

Product Innovation has also been an important part of Lululemon’s growth trajectory.  Its Men’s business has gained the most traction in Asia, where it makes up 30% of sales.  The Men’s business ironically makes up the lowest percentage of sales in Lululemon’s home market of Canada, where it is tied with Australia & New Zealand at 22% of total sales.  However, it has been growing faster than the Women’s business worldwide for the company both pre-pandemic and over the last year, implying that penetration is likely to keep increasing.

Product Type by Geography

Note: 3/1/2020-2/28/2021