Lululemon Athletica Inc. plans to double its men’s and online businesses while quadrupling its international sales in five years, as the yoga wear retailer aims to expand aggressively under its new leader.
Chief executive officer Calvin McDonald, a London, Ont., native who took the top job at Vancouver-based Lululemon last August, wants to boost the business by developing new products and categories, enhancing links between the chain’s bricks-and-mortar stores and digital experiences and expanding its “sweatlife” offerings in Asia and Europe.
And he wants the premium-priced retailer to be known for more than yoga, including running and training.
“We’re good in run – we’re not great in run,” said Mr. McDonald, himself a runner, at Lululemon’s first investor day in five years, held Wednesday in New York.
“If you’re a runner in the room, there is product – if you love Lululemon – that you can’t get from us today. We can round out that assortment.”
Mr. McDonald arrived at Lululemon during a period of relative stability and growth after the retailer had grappled with a number of setbacks.
Former CEO Laurent Potdevin left suddenly in February, 2018, because of improper behaviour. And under previous CEO Christine Day, Lululemon faced a costly see-through pants misstep, forcing the company to invest in revamping its supply-chain capabilities.
As well, founder Chip Wilson stepped down as chairman in late 2013 after he offended some women by seeming to suggest their bodies were not right for Lululemon garments.
Now, Mr. McDonald is intent on moving Lululemon forward in a digital age, capitalizing on its grassroots marketing and focus on holding yoga classes and other events in its stores and beyond, as well as drawing in more men.
“We have very low brand awareness with men,” he said. Men’s wear sales make up roughly 20 per cent of Lululemon’s annual revenue of $3.3-billion, and the company plans to double that by 2023.
Mr. McDonald said he envisions Lululemon becoming more of an “experiential” brand, which is a buzzword in the retail industry for staging or sponsoring events to lure consumers at a time when they can easily just shop at Amazon.
To underline Lululemon’s “experiential” ambitions, the retailer will open a large store in the well-heeled Lincoln Park district of Chicago in July with yoga studios, a meditation space, a juice and food station and areas for community gatherings, Mr. McDonald said.
The company also unveiled other parts of its five-year strategic plan, including increasing total annual revenue by the low teens, “modest” gross margin expansion annually, earnings-per-share growth that will “equal or exceed revenue growth” annually and yearly capital spending of 6 per cent to 8 per cent of revenue.
Lululemon held its last investor day in 2014, when Mr. Potdevin was setting out his strategic plan for the next six years. Company executives said they have already achieved some of those goals or are ahead of schedule. The investor day on Wednesday was Mr. McDonald’s chance to set out his vision.
Lululemon’s international business now makes up roughly 10 per cent of its annual sales, while e-commerce represents about 26 per cent.
Among new categories it is testing is footwear. The retailer is looking to start making its own shoes rather than sourcing them from other suppliers, Mr. McDonald said. And it will launch a beauty and personal-care line in June, including lip balm, facial moisturizer and deodorant.
While Lululemon’s core categories will be yoga, training and running, other possibilities for expansion include tennis and hiking – “where our current guests sweat,” Mr. McDonald said, referring to customers who already participate in those activities. But Lululemon is not considering getting into clothing for baseball, football, hockey or soccer, he said.
Even so, in areas such as running apparel, it still doesn’t have the best-performing tops for a long run or a “split short,” he said.
“We’re really just getting started,” he said. “The opportunity for our business is significant.”