2 Things Gap's Athleta Has Over Lululemon

Gap (NYSE: GPS  )  noted 2013 as the "breakout year" for its women's athletic apparel and accessories brand Athleta. The number of Athleta store locations increased by 85% in 2013 as the company opened 30 new stores and ended the year with 65 stores in 25 states, as well as the District of Columbia. While Gap plans to have about 100 Athleta stores by the end of fiscal 2014, it will still trail yoga-wear retailer and competitor lululemon athletica (NASDAQ: LULU  ) , which reported 263 stores as of May 4, 2014.  Even though it doesn't come close to the bricks-and-mortar store count of lululemon, Athleta has three things that lululemon doesn't which drive customers through its doors and to its registers.

Promotions and sales
As many yoga enthusiasts have discovered, Athleta's apparel is priced competitively compared to lululemon's active-wear with items priced about 7% below those at lululemon. While this may or may not matter to the average shopper, Athleta takes it one step further by offering store promotions from time to time. Shoppers do not need a code or coupon to benefit from the store's discounts. While the promotions vary based on the season, store inventory, and trends in foot traffic, Athleta oftentimes offers customers 25% off of all full-priced items, which means that a pair of $80 yoga pants will actually cost $60 without including taxes.

These promotions drive customers in the doors and push them to purchase more as a result, and some customers would even argue that Athleta has higher product quality than lululemon. Unlike Athleta, lululemon never runs a promotion or sale; instead, over time, it marks down certain products as "Last Chance" when only a few sizes are left in a particular style in order to move product. For customers who want yoga apparel with a lower price tag, Athleta is the place to go because you won't get a low price tag at lululemon -- plain and simple.



Shoes
Customers may be running to both yoga-wear retailers for their stylish athletic-wear and gear, but only Athleta offers a footwear collection. Athleta knows that women love shopping for shoes. So why not shop for the perfect shoe to complement any type of workout while shopping for performance apparel? Just go online and shop Athleta's wide selection of footwear in the following five categories: performance footwear, sneakers, boots, sandals, and flats. The chart below depicts the footwear categories along with their specific details.

Shoes Available

Price Range

Number of Styles

Performance footwear

$50-$215

47

Sneakers

$50-$174

18

Boots

$49-$260

30

Sandals

$26-$220

24

Flats

$36-$120

9



"Performance footwear" designates a particular sport and the appropriate shoes that would best fit that activity. For instance, Athleta has specific shoe styles for running, the gym, golf & tennis, hiking, and swimming. In addition, customers can play around with the color of the shoes based on the color options available. Clearly, Athleta has footwear down pat.

Foolish takeaway
Did you ever think Athleta had so much going for it despite having lululemon as its competition? Foolish investors should keep an eye on Athleta as it attempts to open 30 new stores over the current fiscal year. Athleta is certainly pulling out all the stops to pull women from lululemon's stores. Foolish investors would be wise to follow Gap's progress with its Athleta brand and decide whether or not it would fit in their portfolios.

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  • Report this Comment On July 07, 2014, at 4:57 PM, chadkurtz13 wrote:

    I guess you failed to factcheck your own article. LULU has been offering complimentary hemming for years.

    http://blog.lululemon.com/complimentary-hemming/

  • Report this Comment On July 07, 2014, at 10:55 PM, StopTheHate wrote:

    Alright so, most of this article is not factual. As someone who shops a lot at Lululemon stores and online, I'll give you the real scoop. I won't compare them to Athleta, as I have never once stepped foot into their store. However, I do love me some Old Navy compression pants every now and then!

    As the previous commenter already mentioned, Lululemon has done hemming since they first started out to cater to shorter ladies or just clothing that fit a little long on regular-height or tall ladies. In fact, each time you exit a changing room, the ladies that work there ask if you would like complimentary hemming. I've taken them up on this offer twice, and I've been impressed with what was returned to me thus far. They have also offered to restitch some crops that had a few threads coming out during some serious exercises I was performing.

    Lululemon usually has something on Final Sale unless their store just opened. Anytime I'm in there, they have a range of sizes with items on sale. Usually during the peak of their seasons, they'll announce a "blow out" of sorts and announce that the Final Sale items are additional 50% off. I participated in one in December 2013. I bought 20 or more articles of clothing for around $250 that would have otherwise costed me $800. They DO have sales; you just have to know the store and when they're doing them! I follow posts from my nearest store's Facebook page to get scoops on things I want that I've been waiting to go down in price. I've also noticed that the sales tend to be better in store than online. However, the online website usually refreshes their sale items once a week (usually Wednesday or Thursday after the Monday refresh of new items).

    Shoes has been feedback that many stores have received about not selling. However, if you've ever been to a LLL store, you'll come to find that it would be difficult to fit shoes on their walls. Usually, if you chat up an Educator, they can recommend shoes for any type of exercise of occasion. I don't think the fact that they don't sell shoes should be a factor to shop more at Athleta. That simply isn't part of what they're selling, so relax.

    Most Lululemon stores off free, weekly, in-store yoga sessions (along with other ones like Tae Bo), DJ sessions with live music and snacks, and in-store activities for special holidays like Mother's/Father's Day. Their employees are fun, engaging and don't bother you with sales pitches. They give you the facts about their fabrics that most people wouldn't know just by reading the tag.

    I would do more research on the competition, Natalie, before you post those kinds of things! :)

  • Report this Comment On July 11, 2014, at 11:26 AM, denverrunner wrote:

    Yikes, Natalie! Perhaps you shouldn't skip the steps of fact checking and proof reading. The article states "2 things" and the first paragraph states "three things." You only list two things, but this aside, there is a third thing I can think of that Athleta offers.

    Lululemon has a VERY stingy return policy of two weeks. Tags must not be removed and items cannot be worn. By comparison, Athleta's return policy is extremely generous. You can return an item at ANY TIME, and their slogan is "give it a work out."

    As a woman who owns clothing from both lines, I can say that despite Lululemon's heftier price tag, the quality is the same. Except, of course, for the unfortunate period in 2013 when Lululemon sold see-through pants.

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