Lululemon in decline in the USA
Nothing seemed to be able to stop Lululemon, until now. Faced with a less responsive American market, the Canadian brand is seriously reviewing its ambitions for 2024.
Forecasts below expectations
In its latest financial communication, Lululemon Athletica surprised analysts: its sales forecasts for the current fiscal year oscillate between $11.15 and $11.3 billion, a figure below Wall Street expectations.
The same applies to the first quarter, for which projections remain modest. This situation reflects a marked slowdown in demand in the US market, long considered the Group’s growth engine.
The end of the reign of skin-tight leggings?
Beyond the figures, it’s a whole positioning that seems to be put to the test. Lululemon is struggling to adapt to changing trends, with consumers now opting for looser, more relaxed cuts, a far cry from the brand’s compressive athleisure DNA.
To remedy this situation, CEO Calvin McDonald is trying to broaden the range of products on offer: golf, tennis and runningapparel… a diversification that is proving risky, given that the segment is already saturated. CFO Meghan Frank speaks of “macroeconomic uncertainties”, but the tensions go far beyond fluctuations in purchasing power.
A more favorable international context
Paradoxically, international results offer a striking contrast. In the final quarter to February 2, comparable sales rose by +22% outside America. In comparison, US figures remained… flat.
A strong signal: Lululemon’s growth now seems to depend on international expansion, while the North American market – historically its stronghold – is slowing or even weakening.
A supply chain under pressure
Another worrying factor is the brand’s dependence on Asia for production. Between Vietnam, Cambodia and Sri Lanka, the brand is bearing the full brunt of geopolitical upheavals and cost increases linked to the trade war reignited by Donald Trump.
What’s next?
The plan unveiled in 2021, to double sales by 2026, seems increasingly ambitious given the current situation. It remains to be seen whether Lululemon will succeed in reconciling its technical DNA with the shifting expectations of a saturated market.
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