By Savyata Mishra
(Reuters) – Lululemon, facing its slowest quarterly growth in more than four years, will face Wall Street questions about whether it has made significant steps toward more quickly introducing trendy styles to its stores to better compete with upstart athleisure companies.
According to LSEG estimates, Lululemon is likely to see revenue rise nearly 7% to $2.36 billion in the third quarter ending in October, compared to a nearly 19% increase in the same period a year ago.
Shares of the company, which will report results after the bell on Thursday, are down 33% so far this year.
The Canada-based maker of high-end yoga pants, joggers and sweatshirts is losing ground to brands like Alo Yoga and Vuori, which are refreshing their shelves more often with new styles, a practice that appeals to younger shoppers.
Celebrities like Kendall Jenner, Taylor Swift and Kaia Gerber who previously wore Lululemon activewear have recently been spotted wearing gear from these two California-based brands.
“In established and strong athleisure markets like California, our data so far in 2024 indicates that newer brands like Alo Yoga and Vuori are outperforming Lululemon in attendance growth year over year,” said Elizabeth Lafontaine, research director at Placer. ah.
In addition, Gap-owned Athleta, which sells $109 worth of leggings on its website, returned to growth in the most recent quarter, helped by a trendy collection of sweatpants and T-shirts and social media buzz.
Lululemon’s North American business, on the other hand, is showing signs of fatigue, with product missteps in the women’s sector forcing the company to cut its 2024 sales and profit guidance in August.
Lululemon has attributed the choppy sales to lower availability of smaller sizes and colors in its core women’s apparel businesses, as well as less newness in its core and seasonal styles.
In July, the company had to pull newly launched $98 “Breezethrough” leggings from shelves after customers criticized the tights’ V-shaped back seam as “unflattering.”
“Lululemon is more ubiquitous and more mainstream… it’s a challenge to maintain that pace of growth once a brand becomes that big,” said Ward Kampf, president of Northwood Retail, a commercial real estate company that owns and operates outdoor retail stores. mixed-use properties across the country.
Kampf, who has helped lease stores to Vuori, Alo and Lululemon in Texas and California, said Vuori and Alo are aggressively growing their store count, strategically targeting openings around existing Lululemon locations.
