Lululemon Athletica

Canadian Yoga Brand Flexes in Germany

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The "upward-facing profits pose." Source: Bloomberg

The world’s biggest sportswear companies have a serious problem. German brands Adidas and Puma and their bigger American rival Nike might be the industry’s heavyweights, but only about 20 percent of their clientele is female.

Women’s athletic wear is therefore a key growth sector that boardroom execs – who are predominantly male – are desperately trying to maximize. Puma has taken the approach of millennial-minded fashion, commissioning glam flootwear from the celebrity ranks of Rihanna and Kylie Jenner, while Adidas has an activewear collection with well-established fashion designer Stella McCartney.

But they may already be behind the game: Shoppers at Lululemon Athletica, a Canadian competitor that is now expanding into Germany and across Europe, are 80 percent women already.

The women’s athletic apparel company is little known outside North America, but that could change very soon. It’s half the size of Puma but more profitable, with operational yields of about $420 million (€358 million), or three times as much as its German competitor.

Canadian women, from university students to soccer moms, practically live in the yoga pants and running jackets.

In cities across its homeland, where 85 percent of sales are generated, Lululemon threads are not just for workouts – they are a fashion statement and even a status symbol. Canadian women, from university students to soccer moms, practically live in the yoga pants and running jackets, made from a signature stretchy blend of lycra and nylon. Most items, from leggings to pants and the bestselling sports bras, cost about $100 a piece. Lululemon has cornered North America’s so-called “athleisure” market in an aggressive way, cashing $2.3 billion in 2016 revenues, a 14 percent increase on the year before.

Now the plan is to break Germany. Four shops in major cities will open by next year, with the first in Munich and Hamburg, the company’s Swiss CEO Laurent Potdevin told Handelsblatt.

Lululemon is coming in hot with a drastically different marketing model. While Puma ramped up its profit margins in Germany over the last few years through a sponsorship deal with leading soccer club Borussia Dortmund, the Vancouver-based venture is firmly against such deals.

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Instead it recruits local ambassadors, such as yoga teachers and trainers, offering free clothing and an income on the side from selling its wares. Ambassadors teach free Lululemon-branded classes, attend events and of course sport their gear while getting fit. You also won’t find the company’s stylized “A” for Athletica logo in sporting retail stores. It only wants to sell in its own stores, online shop and select yoga studios. 

The brand could strike it big with German women, who prefer more subtle branding and comfy clothing that can be used across an active lifestyle. However if Puma’s new four-inch sneaker-like stilettos designed by a pop star prove anything, it’s that this big cat and the rest of the gang won’t go down without a fight.

 

Barbara Woolsey is a Canadian journalist writing for Handelsblatt Global in Berlin. Joachim Hofer and Grischa Brower-Rabinowitsch reported this story for Handelsblatt. Georg Weishaupt covers the luxury and fashion industry for Handelsblatt. To contact the authors: b.woolsey@extern.vhb.dehofer@handelsblatt.comweishaupt@handelsblatt.com

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