Have Consumers Been Tired Of Sports And Leisure?

According to the world clothing shoes and hats net, Canada

Manufacturer

Athletica Inc. announced its 2016 fiscal year report on Wednesday. Despite the growth in sales profits, the company's forecast for 2017 was more pessimistic, resulting in over two of the company's share price in the past two days and a 1 billion 500 million dollar loss in the company's market value.

With the shock of the Lululemon stock market crash, market participants are generally thinking about a few questions: has the global sports and leisure fashion created by the Canadian yoga clothing manufacturer has begun to cool down?

Is it possible to maintain a strong growth in the increasingly fierce competition? Do consumers have tired of sports and leisure?

Competition in sports and leisure market is increasingly fierce, and the growth rate in North America is slowing down.

Euromonitor said at a briefing in London earlier this year that the sports and leisure market still has potential because it is gradually changing from a fashion trend to a lifestyle, in line with the vision that consumers can always take into account fashion and comfort.

Over the past five years, sales of leisure sports in North America have increased by 39.2% to $26 billion 50 million.

Over the past few years, the major brands have entered the sports and leisure market. Apart from Nike, Under Armour and other sports brands, American leisure fashion giant Gap Inc and Alexander McQueen are also trying to make a difference in this booming market.

Over the years, many new fashion sports brands have sprung up, and some celebrities' cross-border fashions have also been cut from sports and leisure.

Data from Euromonitor also showed that sales of North American leisure sports in 2017 increased by 5.2% over the same period last year, down from an average of 6.9% over the past five years.

"The growth rate of the market is slowing down. Compared with ten years ago, today's Lululemon competitors are much more," said Jan Rogers Kniffen, chief executive of J.Rogers Kniffen WWE, a consultancy. He added that retailers, such as Nordstrom, Penney, Kohl, and so on, have launched their own sports leisure fashion brands, with players entering every price range.

At the same time, the broad leg jeans inspired by the 1970s trend, and the high waist jeans represented by Forever 21 and H&M, were regained the favor of the fashion trend people. The return of the cowboy trend is also encroaching on the sports and leisure market.

The core financial data released by Lululemon in 2016 fiscal year show that net sales increased by 14% to $2 billion 300 million over the same period, and profits rose 14% to $412 million over the same period last year.

Chief executive Laurent Potdevin said 2017 will usher in a "slow start", which means that the company is not as good as expected.

Stuart Haselden, chief financial officer, points out that online sales have declined since the fourth quarter of last fiscal year, and passenger traffic has begun to decline this year.

Not long ago, the US sports fashion giant Nike released its core financial data for the third quarter. Its sales volume was lower than expected, and its share price fell by 7.3%. At the end of January, Under Armour released its 2016 earnings report, and the fourth quarter sales were much lower than analysts' expectations. Under Armour also sharply lowered the 2017 growth forecast, and then the stock price plummeted 28%.

Ike Boruchow, an analyst at Wells Fargo, pointed out in a research report: "in the past one or two years, once the sales and profit growth of leaders in the field of Nike, Under Armour and other leisure sports slowed down, the P / E multiplier (valuation level) would narrow down."

In response to market challenges, Lululemon has launched a new brand strategy.

In Wednesday's conference call, CEO Laurent Potdevin announced that it will launch a new brand strategy in the second quarter of fiscal year 2017, including launching the first global brand promotion campaign for Lululemon.

The new brand strategy aims to achieve the goal of 2020 - doubling sales to $4 billion in 2020 and more than double profits.

Laurent Potdevin said in a conference call: "we have an untapped opportunity to tell the world who we are and what Lululemon stands for.

Through this disruptive innovation, we will enhance customer loyalty and encourage millions of new people to join our expanding community. "

According to the world clothing and shoe net, Lululemon has worked with an anonymous creative company to jointly launch the event.

The marketing model of Lululemon into a new market is different from other brands. A showroom is opened first, and yoga is carried out locally, and the promotion activities are carried out as brand ambassadors in the selection of experienced experienced practitioners (such as yoga instructors, fitness ghosts, etc.).

Through this experience marketing mode, Lululemon disseminate brand stories among consumers.

Although this way has enabled Lululemon to establish a high loyalty user group, it limits the size and expansion speed of the brand to a certain extent.

In 2017, Lululemon's other strategic measures included the introduction of more innovative fabrics, more men's and women's product lines, and the development of leisure sports accessories.

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Analysts disagree about major financial institutions.

Many analysts of financial institutions still regard Lululemon shares as potential investment targets, and believe that the brand is far from recession, but the growth rate will continue to slow down.

However, this is not an individual problem of Lululemon, but a reflection of the situation faced by the whole fashion retailing industry.

There are still many financial companies who are optimistic about Lululemon.

Mizuho Securities USA Inc. wrote in a research report: "in such a difficult environment, we think Lululemon is in a much better position."

Nomura Securities pointed out that the Lululemon overseas market expansion plan (15 new stores, mainly distributed in Europe and China) is a strong growth opportunity.

Barclays agrees, adding that Lululemon has taken steps to increase growth this year, such as introducing more colorful products and changing store displays.

"Lululemon launched a series of innovative measures to improve the speed of new product listing, which should help the company return to its normal growth level in the near future."

However, Barclays reduced its Lululemon earnings per share in fiscal year 2017 from US $2.6 to US $2.35, and estimated earnings per share for us $2018 in fiscal 2018.

As for Lululemon's plan for sales of $4 billion in 2020, analysts said the goal could still be expected, but warned that this year's performance showed that the growth rate of the company is slowing down.

Credit Suisse initially predicted that same store sales will grow by 3% over the same period this year, but on Thursday it will be adjusted for last year, because the drivers of products are not yet clear.

Wells Fargo points out that Lululemon's business model has brought many advantages to the brand: the two digit growth of Ping efficiency and the initial stage of international expansion, leading the core product area.

But these advantages are largely offset by the risks that are emerging in the model.

Wells Fargo also downgraded Lululemon's earnings per share from $2.56 to $2.34 this year.

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