Lululemon Athletica is thinking big as it looks to build on the momentum it gained throughout the pandemic.
The athletic apparel retailer unveiled a five-year plan to double its revenue by 2026 to $12.5 billion. It cited three three key drivers of growth going forward: product innovation, customer experience and market expansion. Under Lululemon’s new, updated “Power of Three x2 strategy, the company plans to double men’s and digital revenues, and to quadruple international revenues relative to 2021.
In addition, Lululemon’s women’s business and North American operations are expected to generate low, double-digit annual compound growth rates in their respective categories. Annual square footage growth is expected in the low double digits.
Lululemon reported $6.25 billion in revenues for 2021 (up from $3.3 billion in 2018), which put it two years ahead of schedule in achieving 2023 revenue goals which it announced several years ago.
“The success of our Power of Three formula in delivering on our 2023 growth strategy supports our goal to double the business over the next five years,” said CEO Calvin McDonald. “Following our compelling track record of delivering against our goals, I am excited about taking our growth strategies to the next level to serve more and more guests around the world.”
Lululemon CFO Meghan Frank called the financial targets “bold but realistic” and coming from a position of financial strength, “while delivering on our 2023 goals with significant growth across our core business.”
“We have a long runway ahead and are well-positioned to build on our strong momentum and deliver sustainable long-term value creation for all our stakeholders,” she added.
Building on strong customer interest in, and learnings from its pilot membership program, as well as the vision to create “a new path for connected fitness,” Lululemon said it will launch a new, two-tiered membership program — one level paid and and the other free — later this year.
“The intent of the program is to build stronger engagement with its brand, community, and products, to create the most immersive fitness marketplace in the industry,” the company stated.
Lululemon provided details of the program at its analyst day event. The free membership level will give customers early access to Lululemon product drops and exclusive items, along with invitations to in-person community events, reported CNBC.
The paid membership option, which will cost $39 per month, will include the same benefits as the free one with extras such as access to unique fitness content. (Lululemon’s at-home fitness platform, Mirror, charges users $39 monthly for an all-access subscription pass. Existing Mirror users will be rolled into the paid membership program at no additional charge.)
“The goal here is to create one connected community across Lululemon and Mirror,” said Nikki Neuburger, Lululemon’s chief brand officer, according to the report.
Lululemon expects to double the size of its men’s revenues in 2021 by 2026, along with ongoing expansion in its women’s and accessories businesses. The company, which recently entered the footwear category, also sees significant growth opportunities in its core performance categories (includes running, training and yoga) and in tennis, golf and hike.
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In line with its goal to quadruple its international revenues relative to 2021 by 2026, Lululemon plans to open its first stores in Spain and Italy in the next 12 months. It will also continue to build on its growth in Mainland China and other parts of Europe.
"We are setting bold but realistic 2026 targets from a position of financial strength, while delivering on our 2023 goals with significant growth across our core business," said Chief Financial Officer Meghan Frank. The company said its growth plan includes a doubling in men's and digital revenue and a quadrupling in international revenue.