For a few years now, yoga-pants peddler Lululemon has had its eye on a big expansion into Asia and Europe. As it began opening stores, the spending put pressure on the company’s margins, which were also squeezed by growing competition in the athleisure market, as well as some product and PR mistakes: See the see-through yoga pants debacle. Investors have been watching warily.
The expansion is paying off. Lululemon opened stores in Hong Kong, Singapore, and Seoul in the last year, and launched a shop on Tmall, the massive e-commerce market owned and operated by China’s Alibaba, celebrated with a full-day event in Shanghai. On an earnings call with analysts today (March 30), CEO Laurent Potdevin said he was “very happy” with the results.
In China in particular, Lululemon is buoyed by a rising tide of consumers who are getting into fitness, including luxury shoppers trading Prada bags for stretchy tights. At least 10 million people in China now practice yoga, and the number is growing along with the country’s middle class. It’s all good news for Lululemon, which expects its first Hong Kong store to make $8 million in sales in 2016.