Abstract
This paper examines the main aspects of the company Lululemon Atletica. The history of business development, positioning in the sports goods market, and investments were analyzed. The company’s main objective is to promote a mindful and healthy way of life through the sale of comfortable apparel. The work provides an overview of the general features of the fitness equipment industry and the place of different companies in it.
The main problem creating an obstacle to the company’s development was formulated. According to the latter, the business has to develop several goals. From the point of view of financial indicators, indicators of profitability and competitiveness of the firm have been considered in dynamics. In the concluding part, conclusions are drawn about business development prospects and the main medium and long-term goals.
Introduction
Lululemon Athletica specializes in yoga and fitness clothing. Founded in 1998, the business grew rapidly in Canada and then in the U.S., attracting a predominantly female audience. The stock was first floated in 2007, and since then, the brand has appeared several times in the rankings of the fastest-growing businesses (Gamble et al., 2019). In 2014, the first store opened in Europe, in London. Since 2019 began active investment activities of the company, the management invested money in companies in the fitness segment. Since the mid-2010s, the business has launched several coaching and psychological support programs (Gamble et al., 2019). Later, the company noted that it started releasing online training courses during the pandemic.
There is no talk about the growth of turnover in the sportswear industry. This area experienced its peak times during the rise of society’s interest in healthy lifestyles in the mid-2010s. Despite this, Lululemon Athletica could withstand the recession and show high sales relative to its competitors even during the pandemic, when the fitness industry saw the most considerable losses (Gamble et al., 2019). The company’s primary mission is to spread the philosophy of a healthy and conscious lifestyle by selling comfortable clothing. The goals are to enter active sales internationally, to expand online services, and to increase the male consumer segment.
Main Body
Competitive Strategies
In terms of competitive strategies, this company has positioned itself as a manufacturer of the premium clothing segment. The main competitors are Nike, Adidas, and Under Armour. In order to compete effectively with these manufacturers, this business is moving towards an Eastern philosophy of active lifestyle. This makes the brand more unique and aimed at a narrower range of needs. Regarding financial performance, the firm is currently showing a relatively negative trend (Foran, 2022). According to the analytics, the company’s margins remain under high pressure due to the effects of the pandemic and its consequences (Foran, 2022). Moreover, there has been an increase in operating and administrative expenses of 20% (Gamble et al., 2019). However, this figure is expected and predictable, as management needs resources to restructure production into a post-pandemic mode.
Financial Data
The demand for the company’s products has led to excellent financial dynamics. Over the past five years (from 2016 to 2020), the company’s annual revenue increased from 2,061 to 3,979 million USD (up 93%), its net income rose from 266 to 646 million USD (up 143%), and its stock price rose from 55 to 345 USD (Gamble et al., 2019). The company’s forecast for the future is that the business has developed innovative sports fabrics that are more resistant to wear, more flexible, absorb intense sweat during heavy exercise, and neutralize unpleasant odors.
Statement of Problems and Purpose
The main source of odor in sports is not sweat but the bacteria that breed in it. Lululemon Athletica fabric has ultra-fine silver fibers added to the fabric structure, which prevent the development of bacteria and keep your sportswear fresh. Considering the global trends for a healthy lifestyle, as well as the exit from the pandemic, which will significantly increase sales through offline stores, specialists believe that Lululemon Athletica’s quotations will rise in the long term (Gamble et al., 2019). Another factor in Lululemon Athletica’s high-tech is online sales, which now generate almost half its revenue. Consequently, the company is a full-fledged online sportswear platform. And that’s a whole other story.
Thanks to direct Internet sales channels, the company’s revenue during the pandemic did not decline as significantly as its competitors. In addition, this sales model leads to lower sales costs. The need to stabilize costs and reach a growing income is the corporation’s predominant problem. Solving it will require achieving several important medium- and long-term goals. The latter include incorporating active offline sales and unfreezing the operation of retail networks (Gamble et al., 2019). On the other hand, it is important to develop an online store and services for the percentage of people not ready to get out of the remote training mode. Moreover, there is a need to expand the total number of customers, including those interested in buying sportswear for everyday leisure.
Conclusion
Thus, Lululemon Athletica’s development history gives many reasons for a positive outlook. The supply of this business keeps pace with customer demand, often overtaking the latter. The anti-crisis policy that the specialists managed to establish during the limitations of the pandemic showed that this business has a base of good specialists and working online programs. As a result, those declines in the indicators observed now are a consequence of the impact of the lockdown, and the main goal in the medium term should be a full return to the offline sphere with a parallel development of online services.
Reference
Foran, R. (2022). Lululemon Athletica. ABDO.
Gamble, J. E., Thompson, A. A., & Margaret Ann Peteraf. (2019). Essentials of strategic management: The quest for competitive advantage (7th ed.). McGraw-Hill Irwin.
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