Three Reasons why Lululemon Needs to Figure out this Strategy Thing in 2015 (Chapter One)

Yoga pants are the item for women to wear; whether they are heading to the gym, the supermarket or even a night on the town and Lululemon Athletics Inc. (LULU) are the pants women are choosing.  Just like choosing the right pair of pants for your figure, Lululemon and its’ competitors in the sportswear industry are in charge of setting the right methods and operating (or strategy) in order to achieve high levels of performance and thus generate positive returns for their stakeholders.  Lululemon originally differentiated themselves by combining yoga classes and their sportswear and charging premium prices for their pants and other clothes.  With an interesting brand, an outspoken founder and sometimes outrageous prices, Lululemon will be an interesting study on strategy in 2015.

1.  Just this past week, LULU was upgraded by stock analysts at JPMorgan Chase & Co. from a “neutral” rating to an “overweight” rating in a report issued on Friday (Forouzandeh).

Lululemon set its’ strategic management process much earlier than the past month.  Their original intent was “elevating the world from mediocrity to greatness and their mission statement is creating components for people to live longer, healthier fun lives.” (Lululemon)  Each quarter stock analysts analyze company performance and make a recommendation as far as what they believe investors should do with the target stock.  What analysts say about the stock each quarter is one indicator of how well a company like Lululemon is executing on their strategic priorities and achieving their overall mission.  An overweight rating would indicate that portfolio manager believes that LULU will outperform others in the portfolio. 

2.  LULU has invaded Britain again with further expansion plans.

Haute Living reported on LULU’s second location in Chelsea, London with plans for 5 additional locations.  (Neykova)  The article discusses that Lululemon is not keeping it a secret that they plan to expand further in London.   A company, like Lululemon’s, decision to expand internationally may be part of their strategic objectives and/or it may be a strategic decision which the company undertakes after external and internal analyses have been completed.  Other analysts have argued that LULU may be expanding too quickly especially in light of losing some of their most devoted followers, competitive pressure from other athletic wear companies and LULU’s financial performance in 2014. 

3.  Business Insider is explaining the competitive advantage of Lululemon’s $98 pants

Business Insider just posted a video on the competitive advantages of Lululemon’s yoga pants.  (Silverstein) Each woman on the reviewing team liked the fit, style and the brand appeal of the Lululemon pants better although they thought the Athleta pants were a better deal.  This only highlights the competitive pressures that Lululemon will be facing in 2015.  Most analysts believe that LULU’s intended and then deliberate strategy was to set their prices very high.  This strategy worked because LULU had a core group of very devoted followers willing to pay those prices but as the video highlights analysts aren’t sure how loyal LULU’s followers will remain and if the demand for LULU’s products will sustain. 

2015 is shaping up to be an interesting year for Lululemon and it will be great to see where LULU and their iconic yet expensive yoga pants are headed. 

Works Cited:

Forouzandeh, Hossein. "Lululemon Athletica Inc. Stock Rating Upgraded by JPMorgan Chase & Co. (LULU)." Mideast Time RSS. Mideast Times, 26 Jan. 2015. Web. 26 Jan. 2015.

"Lululemon." Learn about Us. N.p., n.d. Web. 25 Jan. 2015.

Neykova, Devora. "Lululemon Athletica Expands in London - Haute Living." Haute Living. N.p., 26 Jan. 2015. Web. 26 Jan. 2015.

Silverstein, Joe Avella and Sara. "Here's How $98 Lululemon Yoga Pants Compare To Cheaper Alternatives." Business Insider. Business Insider, Inc, 23 Jan. 2015. Web. 26 Jan. 2015.