Many have tried but few have succeeded at taking marketshare from athletic apparel maker Nike Inc. (NYSE:NKE)- especially when it comes to footwear. The company has long been heralded as a giant in the sneaker space and dethroning NKE stock has been deemed all but impossible. However, yoga and athleisure brand Lululemon (NASDAQ:LULU) is planning to take a crack at it, and the very effort alone makes LULU stock attractive.
![Lululemon stock lulu stock](https://investorplace.com/wp-content/plugins/lazy-load/images/1x1.trans.gif)
This week LULU announced plans to roll out a sneaker line after testing the waters with $200 Athletic Propulsion Labs in 2017 at select stores. CEO Calvin McDonald said the firm has since learned a lot about footwear and that the company has identified a “white space” that he believes LULU shoes will be able to fill.
Can Lululemon pull off a sneaker line? Many believe so. For one the brand has an incredibly loyal cult following that’s already willing to pay a premium for the Lululemon apparel. Shoes are a next logical step. Plus, LULU has been well received by Generation Z- the up and coming generation said to have even more potential purchasing power than Millennials. So, there’s a huge base of customers likely already getting excited about the launch of the new line.
Details about the shoes themselves are scarce, but McDonald promised there’d be more to share later this year. The biggest question here is whether or not LULU can handle a rollout of this magnitude. The firm will likely only have one shot at creating a shoe line that its customers love as much as its yoga pants; a misstep could lead to disaster.
A Closer Look at LULU Stock
The company has moved on from the PR nightmares of years past- criticism about see-through yoga pants and a revolving door of CEOs. However, it’s worth mentioning that Lululemon doesn’t exactly have a history of great publicity.
Still, since McDonald took the helm things have been going very well for LULU and he could be just the person to take the company to the next level. When details about the shoes are revealed, it could be a boon for LULU stock if the new line is well-received.
When LULU first came on the scene, most didn’t expect the yoga retailer to become such a formidable opponent to Nike, but the two have been battling it out in more than one category recently. Nike has started doubling down on its women’s gear and is planning to launch a line of over 40 new sports bra styles, an area that LULU is known for.
With shoes now on LULU’s radar the two will be battling for marketshare. The question is, “What market?” Nike is planning to come out withnew running shoes boasting a cushioning technology that is said to help beginners take up jogging, but without any details from LULU it’s hard to say whether the release will be overshadowed. A lot of that depends if Lululemon’s shoes are geared more toward athleisure fashion or performance.
Next Steps
For now, excitement about LULU’s new shoe line appears to be mostly priced in. The stock is up 5% from where it was last week. Without details like when the shoes will come out and who they’ll serve it’s difficult to get any more excited. However, I believe Lululemon has the brand power to take it to the big-boy’s table in the shoe market.
As long as the design and rollout are well-executed, LULU’s strong fanbase will be willing to try them out. However, the fact that investors are already excited despite knowing very little about the shoes themselves carries an enormous amount of risk. T
hat kind of anticipation could lead to a big drop for LULU stock if the new line doesn’t live up to the hype.
The Bottom Line on LULU Stock
For now, the more prudent thing investors should be watching is the battle over womenswear. Nike’s latest focus on sports bras and ladies apparel is a direct shot at LULU.
The next few quarters will prove just how loyal LULU devotees are as Nike rolls out competing products. Nike’s size and scale means its decision to go up against LULU is far more threatening than LULU’s first sneaker roll out.
As of this writing Laura Hoy did not hold a position in any of the aforementioned securities.