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Lululemon stretching out to become a big player in men’s wear

The inside of the Lululemon Lab and store in Vancouver, B.C. is seen Tuesday, Nov. 5, 2013.


Lululemon Athletica Inc., known for dressing women in pricey yoga wear, is chasing the $1-billion man.

That is the annual sales target that Laurent Potdevin, the retailer's new chief executive officer, thinks Lululemon can hit in its men's wear business in the next few years, from about $216-million in 2013. He envisages being able to generate those revenues by developing more categories of men's athletic clothing beyond yoga; dedicating more men's space in stores with separate entrances in some outlets – and even separate men's wear outlets; and including men's fashions in Lululemon's overseas expansion.

"We do expect our men's growth to continue to outpace our overall growth for the next few years," Mr. Potdevin told a webcast analyst conference on Thursday at the retailer's Vancouver head office.

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The new Lululemon leader, a former global shoes and snowboard executive, has his work cut out for him. The chain is racing to recover from its 2013 troubles when it had to pull from its shelves too-sheer women's black pants and grapple with other production snags amid stiffer yoga wear competition.

Late last year, Lululemon founder Chip Wilson offended some customers by seeming to suggest they may be too big to wear the chain's clothing. He will step down as chairman this year but remain on the board of directors. CEO Christine Day left the company in January.

The retailer's previous skyrocketing financial growth has slowed considerably and is expected to continue to be sluggish this year as the company invests in its European and Asian expansion.

"This is a company that hasn't grown earnings last year and looks like it won't grow earnings this year," said Christian Buss, retail analyst at Credit Suisse.

"I'm trying to understand what the long-term growth algorithm for the business is. We're going to have 24 months with no earnings growth. We're going to have 400 basis points of margin compression over the last two years."

Mr. Potdevin did not provide long-term profit guidance. But he said the Western European store rollout alone could be a "multibillion-dollar" sales opportunity. He said the international expansion has the potential to be a bigger business than Lululemon's operations in North America. Today it runs stores mainly in Canada and the U.S. and generates about $1.6-billion of sales annually.

Its first foray overseas is encouraging. Sales at its outlet in London, which opened about two weeks ago, have so far beat the company's sales projections by 60 per cent, Mr. Potdevin said. "There are many cities in which the question is not, 'Will we have a store,' but 'When will we have a store?'"

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And while Lululemon expanded in North America with just women's wear, it will branch out overseas with men's wear also, he said.

Felix del Toro, Lululemon's senior vice-president of men's design, said the retailer is exploring adding new athletic categories for men and "seasonally adding new pieces." The strategy would emulate its path in women's wear in which it is also adding new categories, such as running and biking.

The retailer thinks of its prototypical male customer, whom it internally calls Duke, as "the mindful athlete," Mr. del Toro said. (It calls its female prototypical customer Ocean.) Duke is "confident," "well-rounded," "happy" and "comfortable in his own skin," he said. He's not defined by a single sport but engages broadly in athletic endeavours, "pushing his boundaries" and seeking adventure.

Lululemon is developing versatile clothing that men can use for such activities as working out, eating out and travelling, Mr. del Toro said. "We're not providing him gear for his active life, we're providing him gear for his life, which is active ... We call it sweat, post-sweat and no sweat."

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About the Author
Retailing Reporter

Marina Strauss covers retailing for The Globe and Mail's Report on Business. She follows a wide range of topics in the sector, from the fallout of foreign retailers invading Canada to how a merchant such as the Swedish Ikea gets its mojo. She has probed the rise and fall (and revival efforts) of Loblaw Cos., Hudson's Bay and others. More


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