One of Vancouver-based Lululemon Athletica Inc. (Nasdaq:LULU) biggest competitors has set up shop in the yogawear giant's back yard.
Gap Inc. (NYSE:GPS) opened its first Canadian Athleta location, at West Vancouver's Park Royal, earlier this week.
Athleta plans to open a second Canadian store, at Toronto's Yorkdale Shopping Centre, in November. Its vice-president of stores and operations, Jennifer Steichen, told BIV that she expects more Canadian Athleta stores to open but that it is too soon to say how fast the roll-out will be or how many stores will be open within the next year or two.
"We did a deep dive on the GVA (Greater Vancouver Area) and the GTA (Greater Toronto Area.) We're super-excited about continued growth in both of those incredibly important markets," she said.
"I'm headed to Calgary and Edmonton, and also continuing to look at site selection. So we're excited for continued store growth into 2022, and beyond."
One main difference between Athleta and Lululemon is that Athleta does not sell menswear. Luluelmon has been increasing revenue from menswear, which last quarter generated about 25% of the company's sales.
BIV asked Steichen how Athleta positions itself apart from Lululemon, and she said her company has a wider selection of sizes, and that this is a key differentiator.
"We have over 500 styles, both online and in store, and we believe that the Canadian plus-[sized] market has been historically underserved, and we're excited to bring all sizes, from double-extra-small to 3X, online and in-store," she said.
She added that Athleta's range of products includes workout clothing, as well as lifestyle clothing, although Lululemon says the same thing of its product lines.
"Athleta is also more into swimwear and has a sleep line," said Retail Insider owner and retail consultant Craig Patterson. "That means that, for some, Athleta will be slightly less intimidating, in terms of being a store to visit."
BIV asked Steichen if she thought that Athleta's clothing is more value-priced than equivalent products at Lululemon, but she did not answer that directly.
Instead, she said that her company has "done a lot of analytics around our pricing, and we feel that we're going to be priced very competitively in the market."
Patterson, however, said Athleta's price points on clothing tend to be below that at Lululemon. Athleta also puts products on sale more often than Lululemon, particularly when it comes to deep discounts, he added.
What Athleta lacks in Canada is brand awareness because it has not had stores here, Patterson said.
Lululemon, in contrast, has strong brand recognition in Canada, and a community of customers that at times can be like a "cult following," he said.
Both Athleta and Lululemon are involved with Olympic athletes. Athleta has sponsored Olympians such as American gymnast Simone Biles, and American sprinter Allyson Felix. Lululemon, earlier this month, signed on as the official outfitter of Team Canada, starting with the 2022 Beijing Winter Olympic and Paralympic Games, and running through the end of the 2028 Los Angeles Summer Olympic and Paralympic Games.
The Gap does not break out Athleta's exact sales numbers.
Athleta's second quarter 2021 revenue increased about 27%, however, compared with 2019, GAP Inc. CEO Sonia Syngal told analysts on an August 26 earnings conference call.
The brand has set a target of US$2 billion in net sales by 2023, and Steicher called that net-sales target "double" what the company generates now.
Lululemon is smaller than the Gap, which, together with its Banana Republic, Old Navy and other brands, is projecting nearly US$18 billion in 2021 net sales.
Lululemon CEO Calvin McDonald, in contrast, projected on September 8 that his company's 2021 sales will be in the US$6.19 billion to US$6.26 billion range.
Athleta has about 200 stores in the U.S., with about half of its revenue coming from online sales.
"Customers are today, especially during the pandemic, bouncing back and forth between [the] digital and physical world," Steichen said.
