Almost all businesses are suffering in one way or another amidst the coronavirus pandemic. And the trendy athleisure wear brand, Lululemon is one of them.
But when the dust has finally settled, and things return to normal once again, Lululemon might just emerge as an unexpected winner.
Bounce Back Potential
Let’s first look at where the company is today.
Although it has recorded increased sales since the quarantine began months ago, Lululemon’s first-quarter earnings show an overall decline of about 17%. Still, financial analysts remain optimistic that the company will survive the pandemic and come out even stronger than before.
Analyst Randal Konik particularly noted how Lululemon was already a winner before coming into the pandemic and has the potential to bounce back again. He also banked on the fact that the company has recently achieved its highest quarterly market share gain in years.
Analysts like ‘Sweet Equity’ author Jason Kelly are anticipating that the current global health crisis would soon turn into a fitness and wellness boom as people put more focus on their personal health.
Industry investors also seem to have similar sentiments. Private equity firm L Catterton’s Marc Magliacano observed the relation between obesity and COVID-19 infections, concluding that this would cause the public to reevaluate their approach to fitness.
According to the World Obesity Foundation, being obese or overly overweight seem to worsen the effect of COVID-19 to infected individuals. Unfortunately, a sizable portion of the population of developed countries like the United States has a BMI of over 25.
As you can expect, the anticipated fitness boom will significantly benefit companies like Lululemon and other similar athletic wear brands. They may reap gains even before the coronavirus has been adequately dealt with.
Analyst Matt Powell said that people now realize the incentive of exercising at home or even outside during the lockdown. That said, the same group is more likely to purchase more sports or workout gear.
Another incentive to exercising is the finding that being physically active helps prevent acute respiratory distress syndrome (ARDS), a deadly symptom of COVID-19.