By 2020, Lululemon plans to increase its worth to $4 billion, and to do so, it requires more customers. Launching an increased number of innovative leggings or opening more number of stores would not be adequate to reach the target. Hence, along with announcing the company’s strong earnings results for fourth-quarter and fiscal 2016, a few other plans were announced to acquire more customers.
The brand, for the first time, will come up with an entirely global ad campaign, which sounds quite remarkable, although much detail has not yet been revealed.
As explained by Lululemon CEO Laurent Potdevin in the earnings conference call, although the company has been able to taste success through leveraging its “grassroots” marketing campaigns, it has not yet been able to communicate the fundamental essence of the brand across the globe. Potdevin feels that this is crucial as Lululemon acquires global stature as a brand. The company has teamed up with a creative agency, whose name Potdevin did not reveal, but said that the company is one of the pioneers in creating content for Millennials.
Lululemon is, of course, going after Millennials, but whether there is involvement of any celebrity offspring or Instagirl, will be known only in mid-May, when the curtain on the ad campaign would be raised. There is still no clarity about the distribution too, but the Lululemon CEO said that it would match the Millennial manner of absorbing content.
It is true that Lululemon might need an increased number of customers. However, that does not mean that the company is losing any favor with the client base it already has. As reported in the fourth quarter, that had a successful holiday season spanning a considerable period; the company recorded an increase in net revenue by 12 percent to $789.9 million. The revenue for the entire year rose 14 percent and reached the $2.3 billion mark. In comparison to this, sales in other stores that were open for a minimum period of one year rose by 8 percent in the fourth quarter and 6 percent across the entire year.
Another significant fact is that in the year 2016, the company, for the first time in a period of three years, registered a comeback to current operating income growth. Lululemon made a considerable amount of money in the third quarter by selling sports bras. Having witnessed the same trend, sports bras remained the moneymaking item of the company in the fourth quarter, while leggings also continued to be a considerably important category. Given this, the company has plans for the introduction of new styles of sports bras in the year 2017. As confirmed by Potdevin, high growth is expected in the men’s category.
The company has also gone a step ahead with its expansion plans in Asia and Europe. New stores have opened in China and London. The upcoming campaign will focus heavily on these regions, which is intended to enhance the brand awareness in these places.
The Quarter 4 results of the company also included improvements in non-financial factors such as expansion in new markets and consolidation of its global brand position across various markets including China.
All this been said, executives have sent across the warning that sales have shown a slow start so far as the first quarter of 2017 is concerned. This is not a great sign, and has been blamed on the scarcity of options on product color, something which the company intends to rectify.
The executives have also promised a rise in the upcoming quarters, drawing on the different initiatives mentioned. The growth will also be driven by innovative, new products, recent merchandising hire for creating more desirable products, augmentations in omnichannel, as well as exceptional collections of accessories and outerwear to be launched this fall.
The new ad campaign is set to target millennials and will also set the stage for the company to emerge as a new leader in sportswear at the global level. Besides sportswear, the company is also a significant name in the yoga clothing industry, which it plans to continue to dominate.
[Featured Image by Brad Barket/Getty Images]