Lululemon (LULU.O), facing its slowest quarterly growth in over four years, will be under pressure from Wall Street to demonstrate progress in offering trendier styles in its stores to stay competitive against emerging athleisure brands. The company is expected to report a 7% increase in revenue for the third quarter ending in October, totaling $2.36 billion, which marks a significant slowdown from the nearly 19% growth experienced the previous year. Shares of the company have dropped 33% in 2024.
The high-end yoga wear maker has been losing market share to competitors like Alo Yoga and Vuori, which are known for frequently updating their collections with fresh styles, a strategy that resonates with younger consumers. Celebrities such as Kendall Jenner, Taylor Swift, and Kaia Gerber have been seen wearing activewear from these rival brands, further intensifying the competition. According to Elizabeth Lafontaine, director of research at Placer.ai, new brands like Alo Yoga and Vuori are surpassing Lululemon in visitation growth in key athleisure markets, such as California.
Meanwhile, Gap-owned Athleta (GAP.N) has experienced a return to growth, fueled by trendier collections and strong social media presence. In contrast, Lululemon’s North American business has struggled, particularly in its women’s line, resulting in lowered sales and profit forecasts for 2024. The company attributes its sales difficulties to limited availability of smaller sizes and colors in its women’s apparel, as well as a lack of new products in core and seasonal styles. Additionally, Lululemon had to withdraw its $98 “Breezethrough” leggings in July after customers criticized the unflattering V-shaped back seam.