Lack Of Fabric Patents Has Become The Biggest Weakness Of Lululemon

Canadian famous yoga clothing brand

We should not only face the overall downturn of the North American sports apparel industry, but also guard against the eyeing business giant.

(Amazon).

The fierce competition in the United States has led Lululemon to focus more on overseas markets.

Lack of fabric patents, becoming the biggest weakness of Lululemon

According to the world clothing and shoe net, recently, there is news that Amazon is recruiting large sportswear suppliers to build its own sports brand.

Field.

According to sources, Eclat Textile Co., the top supplier of Lululemon, has been making clothing for Amazon since August this year.

For Lululemon, Amazon's new sports brand will divide its market share and squeeze its profit margins.

Eclat Textile Co. has long been developing Lululemon's iconic Luon fabrics and other new materials for help.

Although Lululemon has dozens of patents, most of these patents are related to design, not fabric.

According to Camilo Lyon, an analyst at Canaccord Genuity Corp., "Lululemon can not use intellectual property to resist Amazon's invasion of its market share.

It is unwise to share suppliers without a patent.

Amazon will use its strong price advantage to enhance the popularity of its new sports brand.

If Amazon's new sports brand launches products that are comparable to Lululemon's product quality and price advantage, the original customers who follow the fashion of Lululemon are likely to be the first to turn to Amazon.

In two days after the announcement, Lululemon's share price fell nearly 4%.

Camilo Lyon's rating on Lululemon's stock is "selling", and its share price is expected to continue to fall to $43.

North American sports market downturn

In addition to facing the competition of Amazon's new sports brand, Lululemon is also facing a downturn in the North American sports market.

In the past month, Tom Nikic, an analyst at Wells Fargo Securities, said in a report last month that consumers have flocked to buy sports, casual wear of Nike, Lululemon and Under Armour.

But consumers already have enough clothes like this, coupled with the bankruptcy of some sports retailers and the stagnation of product innovation, the development of sports and leisure industry may slow down.

"In general, the whole industry is taking a break," Nikic said.

Lululemon announced its second quarter results in August: net profit decreased by 10% year-on-year, net sales increased 13% year-on-year, and same store sales increased by 7% compared with the same period last year, which is one of the relatively good brands of North American sports brand in the same period.

Despite the overall environmental disadvantage, Barclays Research's Matthew McClintock remains optimistic about the performance of Lululemon's shares. He said: "we are still optimistic about Lululemon. The company's second quarter performance proves that they are not affected by the pressure on the sports and leisure industry."

Earlier this month, Dana Telsey of Telsey Advisory Group said: "Lululemon's recent performance and its long-term prospects will increase its share price. We have seen the strength of the Lululemon brand, the company's control over distribution and the continued attractiveness of its specific categories to consumers, so that they can not be affected by the overall trend of the industry."

Pay attention to overseas market and men's clothing category.

Although Lululemon's performance has improved this year, it is also facing more serious competition in yoga pants and other sportswear markets.

The brutal market environment in North America forced Lululemon to seek growth overseas.

Recently, according to Lululemon's CEO Laurent Potdevin, he had conducted preliminary talks with Alibaba executives including Ma Yun on the development of the Chinese market at the end of September at the activities of Canada Gateway.

Alibaba has always said it is working hard to establish a new retail environment in China called New Retail (new retail).

A spokesman for Canada Gateway declined to comment on the conversation between Laurent Potdevin and Ma Yun, but he pointed out: "in China, online retail consumption accounts for only 18% of total consumption.

The new retail strategy will help traditional brand entities and retailers use the technology provided by Alibaba to change the way they attract consumers and provide consumers with new, more digital ways of shopping.

Laurent Potdevin also agreed with Alibaba's new strategy.

He added that many stores have begun to break away from the traditional physical retail mode and use a large amount of retail space to provide customers with various unique experiences and services.

Take Lululemon as an example, they will provide Yoga lessons to their customers in stores. In August this year, Lululemon opened the first meditation room, called Mindfulosophy, to allow customers to meditate and relax themselves.

According to Laurent Potdevin, Lululemon's strong sales performance in China has benefited to a certain extent the efficiency of new stores and the rapid growth of its Tmall sales (up by 175% over the same period).

Lululemon's influence is growing in China, which will help the brand achieve a goal of exceeding 1 billion US dollars in international sales in 2020.

Laurent Potdevin said: "we will customize different products according to the local market and community. We have 2500 Brand Ambassadors around the world. They will keep up with the market trend.

Understand what consumers want and bring more customers to the company.

At present, sports products begin to pay more attention to fashion on the basis of practicality. Lululemon has a sense of fashion and practicality, which gives us great competitive advantages.

Lululemon said that by 2020, annual sales of digital sales channels, North American market and men's clothing will reach $1 billion, and the total sales volume of the brand is expected to reach 40 billion.

At present, Lululemon has annual sales of men's clothing of about 500 million US dollars, accounting for 20% of total sales, and has become a new important growth point of the group.

More interesting reports, please pay attention to the world clothing shoes and hats net.