Lululemon Is Gaining Men's Approval, China Is Growing Rapidly

Lululemon athletica inc. LULU delivered a second-quarter earnings beat on Thursday amid lots of questions surrounding the athletic apparel industry.

On the earnings call, after raising fiscal year 2017 guidance the company highlighted two “secret weapons” that will drive the brands goals to $4 billion in revenue by 2020: China and a growing men’s segment.

Lululemon Gaining Men's Approval

“Men's is still one of our best kept secrets and we will focus on guest acquisition and talking to men in unexpected ways through curated and targeted experiences, community activation and co-located stores,” said Lululemon CEO Laurent Potdevin.

Lululemon hopes to grow their men’s business to $1 billion by 2020.

Lululemon has been seen as primarily a female-dominated brand, despite a wide offering of men’s selections. One of the most pressing conversations in the industry at the moment is that many male-dominated brands are trying to grow their women’s segments but fail to adequately emphasize on the female consumer.

Under Armour Inc UAA has struggled in this area, but knows it needs both genders to succeed.

It may be easier for a female-dominated brand to grow men’s line than vice versa.

“I think it is easier for a women’s brand to grow a men’s line. LULU has already established a business there. I do not expect men’s to ever rival women’s size though,” sports industry analyst Matt Powell told Benzinga.

China: A High-End Athleisure Opportunity

China is another interesting growth opportunity given Chinese consumers increasing preference for high-end athleisure wear. This segment is expected to overtake luxury sales by 2020, according to an Euromonitor International report.

This figure was accurately reflected in Lululemon’s second-quarter report, which saw 70 percent year-over-year market growth in Asia and 350 percent year-over-year growth in China.

“Athletic footwear and apparel in China are growing at a brisk pace. There is great potential for any active brand there,” said Powell.

Lululemon plans to open six stores in the second half of the year in China.

“We are really focused on China right now, which we think by 2020 will represent probably 60% to 70% of that Asia-Pacific market,” concluded Potdevin.

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