Lululemon Athletica, which is holding its analyst day on Wednesday, announced a new five-year growth plan that aims to “double men’s, double digital, and quadruple international” revenues. Overall, Lululemon is targeting revenue growth in low teens over the next five years.
In a statement, Lululemon said that building upon a year of considerable growth in 2018 and having already delivered on several of its key 2020 goals, the company is meeting with investors and analysts to outline its growth strategy for the next five years. The company plans to fuel growth through its Power of Three strategic plan to drive product innovation, create integrated Omni guest experiences, and to expand deeper in key markets around the world.
The growth strategy includes a plan to double men’s and digital revenues, and to quadruple international revenues. The company’s core women’s business and its agile store formats in North America will also remain focus areas and are expected to generate revenue growth in the low double digits annually for the next five years.
“We’re ready to build upon our success and embark on the next phase of growth at Lululemon to realize the full potential of our brand,” said CEO Calvin McDonald. “We believe Lululemon has a unique opportunity to push beyond traditional expectations to develop innovative products and become a fully experiential brand that creates compelling experiences for guests who want to completely live into the sweatlife.”
The Power of Three strategic plan also includes contributions from new product categories and offerings, such as its membership program which is currently in pilot, as the company further leverages its position as an experiential brand for guests across channels.
Power of Three Growth Strategy
The company’s three priorities to drive revenue growth over the next five years are:
- Product innovation: The company expects to more than double the size of its men’s revenues by 2023. In addition, its plans call for continued expansion in the women’s and accessories businesses. Both existing and new product categories are planned to grow, with lines supporting yoga, running and training. The company also plans to continue its product collaborations, expand its popular Office/Travel/Commute category, and pursue new opportunities, such as selfcare.
- Omni guest experiences: The company expects to more than double its digital revenues by 2023. The company will focus on offering an integrated guest experience across channels which are intended to inspire, provoke and celebrate guests who live a healthy and mindful lifestyle across multiple experiences – such as events, new store formats, and its innovative membership program that fosters connections among guests.
- Market expansion: The company plans to quadruple its international revenues by 2023. The company’s recent success in its international markets demonstrates that the sweatlife translates across cultures and geographies and presents considerable growth potential for the brand. Expanding across China, as well as the APAC and EMEA regions, will be continued areas of focus for the company. The company also believes that considerable growth potential remains in both the U.S. and Canada and it plans to leverage its agile store formats, digital experience, and community connection.
A Truly Experiential Brand
The company also is sharing its vision — to be the experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect — which it believes speaks to guests who want flexibility and choice as they lead a healthy, mindful lifestyle.
“Lululemon is purpose-driven and is positioned well to continue to inspire guests living the sweatlife across multiple experiences,” McDonald added. “We believe we are operating from a position of strength as we invest in creating dynamic experiential moments for our communities to connect and come together.”
The company created and hosted more than 4,000 local events last year and demonstrated success with larger-scale experiences such as the SeaWheeze half-marathon in Vancouver and 10K runs in Edmonton and Toronto. The company’s run clubs and yoga partnerships have long been a staple of the company’s community-based foundations and success.
To embody its experiential brand ambitions, the company announced it will open a 25,000 square-foot experiential store in Lincoln Park in Chicago in July 2019, complete with yoga studios, meditation space, healthy juice and food, and areas for community gatherings.
In addition to more than doubling men’s and digital, and quadrupling international revenues, other key financial drivers of the company’s Power of Three strategic plan include the following:
- Total annual revenue growth in the low teens for the next five years;
- Modest gross margin expansion annually;
- Modest SG&A leverage annually;
- Operating income growth to exceed revenue growth annually;
- EPS growth to equal or exceed operating income growth annually;
- Annual capital expenditures of 6-8 percent of revenues; and
- Annual square footage growth in the low double-digits.
“Our new five-year strategic plan reflects the potential we see across several areas of our business. The three main growth pillars are consistent with our prior plan, and we will continue to grow our core business while expanding into new categories to drive earnings growth and shareholder return.” said PJ Guido, the company’s chief financial officer.
Speaking to investors at the company’s first analyst day in five years are: Calvin McDonald, chief executive officer; Sun Choe, chief product officer; Celeste Burgoyne, EVP of Americas and global guest innovation; Stuart Haselden, chief operating officer and EVP, international; and PJ Guido, chief financial officer.
Image courtesy Lululemon