Lululemon Serves up Tennis and Golf Gear in Head-to-Head Match vs Nike and Adidas

If you haven’t dropped in on Lululemon’s website lately, you might be in for a surprise.

Where once athletic women and yoga apparel stood as the main page mainstay, now finds a pair of tennis players, serving, volleying, modeling but mostly taunting the competition.

“I’m very excited that we are advancing our play strategy as well with the launch of our first ever ‘Designed for Tennis’ collection that will be available in stores and online beginning this week,” Lululemon CEO Calvin McDonald announced on the company’s Q4 earnings call Tuesday (March 29) afternoon.

While acknowledging that the majority of the company’s growth and revenue will continue to come from its core yoga and athletic training apparel for women and men, the Vancouver-based retailer made no secret about its plans to grow its product pipeline by expanding into more activities and taking on long-standing rivals in whole new sports.

Oh, and by the way, if the imminent launch of Lulu’s take on tennis grabbed your attention, McDonald dropped a second disruptive shoe.

“Our first ever ‘Designed for Golf’ collection will roll out next week,” he added, before noting that the week before, the omnichannel athletic apparel company had also launched its Women First footwear collection.

For those keeping score at home, that’s three distinct new categories being added to Lululemon’s portfolio in a three-week period.

Game On

Compared to Nike, which is worth $220 billion and did $45 billion in sales last year, Lululemon is still small, generating “just” $6.2 billion in revenue with a market value that is one-fifth the size of its larger rival. Compared to Adidas, Lulu does about only one-quarter the revenue of the German giant yet they both are worth about the same in terms of market cap.

Even so, Lululemon’s moves — both in-store, online and on the conference call — are surely being watched, as it laid out plans to further its growth via the addition of 70 new physical stores to an existing worldwide roster of 574 locations. It’s all part of what McDonald said was aimed at leveraging the current environment and the company’s momentum.

“Lululemon continues to benefit from several consumer trends,” McDonald said, before rattling off four examples that are driving that, including the continued outperformance of athletic apparel, a rise in consumers dressing for their fitness routines while living their everyday lives, the continued migration toward omnichannel retailers, and lastly, the crazy times we live in that have heightened awareness on physical, mental and social well-being.

“These trends have accelerated during the COVID-19 period and we are well positioned to continue to grow our business in 2022,” McDonald concluded, while pointing out that first-quarter revenue was pegged to rise about 25%.

For the trailing three months that ended Jan. 31, the company said revenue increased 23% to $2.1 billion, with comparable store sales up 22% led by a 32% gain in stores and a 16% improvement in digital.

CFO Meghan Frank told investors that while Lulu’s investment in home fitness firm Mirror met reduced expectations, the company was still firmly committed to expanding the concept.

Frank said the company would provide further details on Mirror, as well as the company’s broader global growth plans at the upcoming analyst day event.

“It’s important to note that we remain in the early days of our growth trajectory outside of North America,” Frank said on the call, noting that international revenue grew by more than 50% last year, with the EMEA region turning profitable for the first time, yet still represented just 15% of Lululemon’s overall business.