Lululemon has always been one of the go-to brands for those seeking quality athletic wear. Its garments, known for their comfort and design, have been a staple in the wardrobes of many loyal followers. However, something is changing in this company's commercial strategy.
Recently, a significant increase in discounts has been detected in its stores in the United States, which is unusual for a brand that usually keeps high prices and offers few promotions. Analysts from Jefferies have warned about this trend, calling it concerning, as it could indicate difficulties in selling accumulated stock and a possible weakening of the brand.
Lululemon increases its discounts and faces new challenges
The increase in discounts at Lululemon has surprised experts. In fact, a note from Jefferies warns of discounts at "alarming rates." Promotions have especially spread in main categories, where discounts used to be almost nonexistent. In addition, the inconsistency in prices for identical products suggests an urgency to liquidate inventory, according to Retail Dive.
This phenomenon coincides with a decline in mall traffic in the United States, which translates into slower sales and a less favorable revenue pace. To make matters worse, Lululemon's operating costs are rising at a faster rate than its revenue, which puts even more pressure on profit margins. This situation forces the company to change its product and pricing strategy to keep competitive.
Lululemon is not only facing internal challenges. The brand is losing ground to direct competitors like Vuori and Athleta, who have managed to capture more attention both in physical stores and on digital platforms since early 2024. These companies stand out for a more polished presentation and offers that attract a younger, price-sensitive audience.
Nevertheless, Lululemon is betting on aggressive expansion, with the opening of 56 new stores in 2024 and plans to open between 40 and 45 more in 2025. This strategy, however, may be risky in a context of declining traffic in the United States and more cautious consumer spending. To counter rising costs, the company plans to raise its prices starting in the second quarter of the year.
With initiatives like the launch of the "No Line Align," a seamless legging aimed at renewing interest in its products, Lululemon is trying to reinvent itself. However, if sales don't improve and discounts keep increasing, the brand could face a critical stage in its trajectory. Meanwhile, the most loyal followers hope the company regains its former strength without their wallets suffering too much.