Lululemon faces new threat with debut of Nike-Kardashian line

[NEW YORK] For Lululemon Athletica, Nike’s partnership with Kim Kardashian’s Skims label presents yet another problem for the embattled yoga-wear brand as it tries to pull itself out of an extended sales rut.

NikeSkims, debuting on Friday (Sep 26), offers lower prices across critical categories such as track jackets, sports bras and leggings, compared to its peers, putting pressure on its more expensive rivals, analysts say.

“We view this as a negative for Lululemon, especially with the younger consumer”, as the NikeSkims collection starts to grow, Anna Andreeva, an analyst at Piper Sandler, said in a research note. According to her analysis, prices for NikeSkims goods are about 35 per cent lower than similar items sold by competitors.

Under chief executive officer Calvin McDonald, Lululemon’s robust sales growth has dissipated over the last year as rivals such as Alo Yoga and Vuori grab market share while the industry tries to cope with higher costs from tougher US trade policies.

Lululemon’s comparable sales rose 1 per cent last quarter, short of analysts’ projections. That’s a big slowdown from double-digit gains in 2022 and 2023. The company’s stock has plummeted more than 50 per cent this year.

Issues are mounting for Lululemon. McDonald cautioned earlier this month that he’s “seeing fatigue with the consumer”, especially the brand’s most valuable ones that have shopped at Lululemon for a long time. He acknowledged that the brand had become too predictable as competition ramped up.

Lululemon is “in a downward spiral”, analysts at HSBC wrote in a note. “Turning around the US will likely be an uphill battle, while eventual international slowing could be another leg down.”

Flagship crowds

Nike chief executive officer Elliott Hill, who’s in the early stages of his own turnaround effort, said in March that the world’s largest sportswear retailer plans to roll out NikeSkims globally over multiple seasons.

Though production delays set back the initial North America launch by several months, NikeSkims began releasing products online and in select stores on Friday. The first collection has 58 styles that include biker shorts, racerback tanks and accessories such as gym bags and yoga mats.

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Nike is using its sizeable roster of signed athletes to hype its brand with Kardashian, with ads featuring tennis legend Serena Williams and Olympic stars including Jordan Chiles, Chloe Kim and Sha’Carri Richardson.

On Friday, shoppers waited in lines outside the Nike and Skims stores on opposite sides of New York’s Fifth Avenue, just down the street from Lululemon’s own location.

Janel Tasker, 31, had found her place in line outside Nike more than half an hour before the 10 am opening, and she’d already bought NikeSkims products online.

“I want to see it in real life,” Tasker said. “Before it gets sold out.” BLOOMBERG