Adding casual clothing to the mix
As the athleisure craze took off, Lululemon looked to capitalize by offering additional casual, non-athletic wear, and even business casual clothing.
Its men's ABC (anti-ball-crushing) pant — $128 stretchy pants that are Lululemon's version of comfortable jeans — are paving the way here and have become one of its most popular items in this category.
Its expansion into business casual has been "well received and superbly executed," Saunders said in a note to clients on Wednesday.
He continued: "Product extensions are usually fraught with risk as they can easily dilute the focus and purpose of a brand. However, Lululemon has maintained its core emphasis on producing mindful products that have great design with superior functionality."
Shifting focus to menswear
Lululemon has been doubling down on menswear and plans to grow this category into a $1 billion business by 2020. The company said in a recent earnings call that it is well on its way to achieving this.
"Men's is one of our largest and most exciting areas of future growth," McDonald told investors on Wednesday.
Cashing in on the $11 billion self-care industry
Lululemon launched its self-care collection in October. This includes deodorant, dry shampoo, cleanser, moisturizer, and balm. These items are not currently available online but only in select stores.
"We believe this category holds great opportunity for us and is a natural extension for our brand," McDonald said on Wednesday. "We continue to attract and acquire new guests, while building greater share of wallet with our highly engaged existing guests."
Launching an Amazon Prime-style membership
In December, Lululemon announced that it had been testing a new loyalty program in Edmonton, Canada. It later announced testing in Denver. For a $128 annual fee, members were treated to a pair of pants or shorts, access to Lululemon's classes and events, and free shipping on online orders.
On Wednesday, McDonald said Lululemon plans to expand this service to additional US cities in 2019, as it has seen "wonderful take up" so far. This loyalty program provides the company with a new stream of revenue and access to more customer data.
