Lululemon Athletica Inc. (TSX:LLL) has outfitted the yoga mom generation in trendy active wear and now its Ivivva Athletica brand is targeting their daughters.
“There’s some very excited young girls out there,” said Lululemon CEO Christine Day in a phone interview from Vancouver.
“I think we have an opportunity to improve tremendously on what young women wear.”
Ivivva, a brightly-coloured, dance-inspired line for girls aged six to 12, is debuting beside Lululemon’s flagship Vancouver store Friday, followed by locations in Victoria and Calgary in December.
Ivivva stores will be independent of, but near Lululemon stores, with initial sales geared toward girls with moms who shop at Lululemon, Day said.
“Definitely what you’ve got is an athletic parent shopping and the goal is to increase (sales) on the number of young women who participate in athletic sports.”
Lululemon’s foray into the pre-teen market comes after it raised earnings guidance last month for its third quarter due to better than expected fall sales and launches as holiday shopping picks up.
Ivivva clothing, which will cost about 30 per cent less than Lululemon, will initially focus on dance, gymnastics and general athletics and expand to team wear, such as warm up and training uniforms, next fall.
“For young active girls, one of the barriers is they want to look good, so they drop out of sports and spend their time trying to look good, so were trying to make it easy for them to do both.”
Ivivva was developed so girls can go straight from practice to the mall.
Day said it will be Coco Chanel’s daughter meets Tofino, referring to the laid-back Vancouver Island destination famous for its surfing and rainforest.
“(The colours are) not like baby blue and pink, like for little kids. They’re more appropriate for the maturing girl who does have a sense of fashion and fun.”
The fitting room area will have a runway, where girls can model for their friends and include “Coco’s closet” areas where they can imagine what outfits will look like in their closets.
There will be a lot of leggings, Day said. And of course, yoga pants.
John Williams, senior consultant with J.C. Williams Group, said the move is logical, based on what other retailers like the Gap and the Limited have done.
“Once you cover your territory with an adult concept…you say ‘what next and let’s take the brand to another related segment’.”
Williams added that it is risky to spin off a new brand, noting tween lines work best when there is some association with the original brand.
“The issue is if (Ivivva) is big enough to support a stand alone store,” he said. “If you stray too far, you’re losing the momentum or the power of the parent brand.”
But Day said creating a separate brand is strategic because adding a junior label to an existing line jeopardizes sales from core customers.
“When you start out with a target consumer who’s that 32-year-old woman, she’s very particular about what she wears and she is that key influencer who influences a bandwidth of guests from 15 to 50.”
“She does not want to wear what an 11-year-old wears and she doesn’t want to be in mommy and me outfits.”
Mark Rosen, an analyst with Accountability Research Corp. said the move to diversify from yoga wear is savvy.
The company is tapping into a lucrative market in which many tweens already wear Lululemon accessories, he added.
“I imagine the company saw this too and thought this was sort of a no-brainer.”
“They do have that sort of core 30-year-old range, but you see all kinds of people wearing them, all ages, so to take their daughters in there as well…that’s an extra leverage they have for pulling in the tweens.”
Day said the company is cautiously optimistic about holiday sales.
But, aside from the Ivivva launch, Lululemon’s holiday strategy is not to re-invent an already successful business model. Instead it will make minor adjustments, such as dropping January inventory in stores before Christmas, she added.
“What’s really nice about being in the athletic business is that I don’t have to worry about carrying red sweaters in January, so we have a little bit more flexibility compared to traditional retailers,” she said.
“We’re using that strength to give us some upside and also to protect us if there’s a downside.”
Day said an October trial period of free shipping for online orders saw nominal costs that were absorbed by accelerated sales and contributed to higher revenues. Free shipping is now a permanent online feature.
Last month the company announced a new guidance of $110 million to $112 million for the quarter ended Nov. 1, compared with earlier guidance for a range of $95 million to $100 million and $87 million a year ago.
