Europe

Lululemon is moving to Spain. On Tuesday, the Canadian athletic apparel, accessories and retailer revealed plans to open two stores in Spain this fall, as well as a Spanish e-commerce site this summer. The move marks the company’s first European expansion since pre-pandemic times in 2019. 

Lululemon expanded its assortment to include a hike collection in June.
Courtesy Photo ASATO iiDA

​​“As a brand [that] supports wellbeing, Lululemon has a strong synergy with the active, balanced lifestyle enjoyed in Spain,” said André Maestrini, executive vice president, international. “We’re looking forward to connecting with Spanish guests through our website and at our first retail stores opening in Madrid and Barcelona. The strength of our model across product innovation, guest experience, community and culture provides a unique advantage as we introduce Lululemon to our newest market.”

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The e-commerce site lululemon.es will launch later this month, followed by two stores — one in Madrid and one in Barcelona — in September. Lululemon has nearly 40 stores across eight countries in Europe: France, Germany, Ireland, the Netherlands, Norway, Sweden, Switzerland and the U.K. Internationally, the retailer has 579 stores. 

Lululemon unveiled its first collection of sneakers in March.
Courtesy Photo Jenna Saint Martin

Meanwhile, Lululemon continues to grow, improving on top and bottom lines in the most recent quarter, despite industrywide headwinds. In April, the retailer set its sights on a $12.5 billion revenue target by 2026. At the time, company executives said it also had plans to open new stores in Thailand and Italy within the next 12 months. In addition, a second experiential store will open in Houston later this year. 
The firm is also deep in product expansion mode, releasing women’s sneakers; workout hijabs; hiking, golf and tennis apparel; bags made from mushrooms; resale, and at-home fitness, all during the pandemic. Lululemon is also the official outfitter of Team Canada (a role it will retain through 2028).
“We’re in the early innings of growth,” Calvin McDonald, Lululemon’s chief executive officer, told analysts in April.

Nike Swim is dipping its toes into sustainable swimwear with the launch of the Icon Collection, the swim brand’s first sustainable line. 
“We know that it’s kind of table stakes at this point to have sustainability in your product. But for this [line], we did kind of take it to the highest level across the entire collection,” Brianna Showell, vice president of marketing at Nike Swim, a division of Nike Inc., told WWD. “That’s one thing that we’re really proud of.”
She’s referring to the men’s and women’s swimwear collection that’s made with 85 percent or more sustainable fabrics and trims, including recycled lining and jerseys.  

Nike Swim launches the Icon Collection, the brand’s first swimwear line made from mostly sustainable fabrics. 
Courtesy Photo

The introductory assortment, consisting of about 25 pieces, includes one-piece bathing suits, midkinis, two-piece separates and men’s trunks in splashy neons, color-blocked cutouts and Nike logo patterns. It looks a bit more like streetwear than beachwear for some. But Kelly Hibler, president of Nike Swim, said that’s the point. 

The collection isn’t just for swimming, he said. It’s for “in-and-around-the-water” activities.
“You want to be able to wear what you have, and sometimes that means I’m going to wear it to the beach, and when I get to the beach, I want to take off my sweatshirt and go dive in the water and I don’t want to worry about changing,” Hibler said. “And sometimes I want to leave the beach and be able to go to a place to sit outside and have something to eat, and talk about the day spent in motion. So swimwear is a fun way to be able to connect through consumers’ lives that way.”

Pieces from Nike Swim’s Icon Collection. 
Courtesy Photo

Meanwhile, all of Nike Inc. continues to grow, despite the pandemic and the recent political storm in China over Xinjiang cotton. Nike Swim executives wouldn’t comment on the situation abroad, except to say that “Nike Swim is committed to growth in Asia,” Hibler said. “While still in its early stages, we see it as a future accelerant to our business.” 
But Nike Swim is just one of many swimwear brands that had record sales during the course of the pandemic. In fact, the business is on track to have its best year ever. In the last 12 months, sales in the Nike Swim North American business surged 36 percent, year-over-year, while the women’s division jumped 17 percent during the same time period. Globally, Nike Swim revenues are expected to be up 30 percent, year-over-year, for the period between June 2020 and May 2021. 
“COVID-19 has really awakened people’s desire to get back in the water,” Hibler said. “And when you think about that — just the difficulty of buying Nike Swim is hard [because stores were temporarily closed.] And that’s also during a time when most pools have been closed, and lockdowns. But people have found a way to keep water as part of their life and that’s super exciting.
“Much of the growth is from nearly doubling the business in Europe, including new distributorships and current partners broadening their assortments, adding the new men’s and women’s Icon line,” he continued. “The Icon line opened opportunities with new retailers.
“We have a continued focus on growing the women’s business,” Hibler added. “We know our female consumers demand both performance and style and we are committed to serving them across our product line. The Icon line specifically addresses our target consumer’s love for sport-inspired bold swim style.”

Nike Swim’s Icon Collection. 
Courtesy Photo

The collection is also geared toward the “Phenom consumer,” or 18-to-25-year-olds, slightly younger than Nike’s regular clientele. 
It’s that consumer, Showell said, shoppers that are often grouped in the Gen Z category, that is increasingly concerned with social topics, such as sustainability and inclusivity — and is willing to pay for it.  
“What is important to them is really the transparency and authenticity in both the actual creation of the product, but also in the marketing [and] equality, around inclusivity, health and wellness, sustainability and really just their love for street style,” Showell said. “They’re young, creative, ambitious, forward-thinking trendsetters and we really wanted to serve their needs with this collection and [go] a little bit younger than we had in terms of our design inspiration.” 

Kelly Hibler, president of Nike Swim, said the Icon Collection isn’t just for swimming. It can be worn as street style as well. 
Courtesy Photo

Nike Swim, which is licensed and developed by Perry Ellis International, Inc., is offering the Icon Collection in sizes XS to XXL. Prices range from $40 to $80. The collection launches in the U.S. today at Nike stores, as well as internationally at nike.com, rolling out to other brick-and-mortar retailers later this month, including Asos in June.

Capri Holdings Ltd.’s recovery cheered Wall Street during Thursday’s early morning hours after the retailer revealed better-than-expected quarterly earnings. 
The fashion group — parent company to the Michael Kors, Versace and Jimmy Choo brands — beat quarterly sales estimates and increased profits. Company shares rose more than 7 percent during Thursday’s session as a result.
“Our performance demonstrates the power and desirability of the Versace, Jimmy Choo and Michael Kors brands,” John D. Idol, Capri’s chairman and chief executive officer, said in a statement. “Through creativity and innovation, our luxury houses inspire excitement and passion, creating an emotional connection with our consumers. We are also attracting new consumers to each of our luxury houses as evidenced by the double-digit increase in our consumer databases.”

Total company revenues for the three-month period ending Sept. 26 declined 23 percent to $1.1 billion, down from $1.4 billion the same time last year. But Capri still managed to widen its profits to $121 million, compared with $73 million a year ago. A noticeable improvement from a company that lost a combined $731 million in the last two quarters. 
In the most recent quarter, Michael Kors, Capri’s largest business, had top-line sales of $793 million, down from more than $1 billion a year ago. The brand pulled in a profit of $190 million, down from $222 million last year. Versace, which the company bought in December 2018, had revenues of $195 million, compared with $228 million a year ago. Profits were $20 million, up from just $9 million last year. At Jimmy Choo, revenues were $122 million, compared with $125 million last year. The luxury footwear brand managed to break even, compared with a loss of $10 million a year ago. 

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While things like travel retail may be on the decline for the foreseeable future, Idol told analysts on Thursday morning’s conference call that luxury is making a comeback. 
“Consumers are spending at higher rates on luxury products as there has been reduced spending on experiences due to travel restrictions,” Idol said.
“Luxury is enduring, as it creates an emotional connection with consumers, inspiring excitement and passion in those who value design, innovation, as well as exceptional quality,” he continued. “The industry has proven resilient with sales, historically recovering rapidly following economic downturns and global health crises.”
By category, Versace showed strength in men’s wear and fashion athletic footwear, along with the Barocco V pattern, while Jimmy Choo sold out of its $5,500 Jimmy Choo x Timberland Swarovski crystal-studded boots almost immediately. The company expects the brands’ revenues to grow to $1 billion and $500 million, respectively, over the next several years.
At Michael Kors, large handbags and footwear, in addition to men’s accessories and outerwear, performed well during the quarter. 
“It’s really nice to see big backpacks selling again,” Idol said. “We see the greatest softness in women’s ready-to-wear and men’s ready-to-wear and that’s really across the group.”
Meanwhile, total company e-commerce sales increased 60 percent during the quarter, year-over-year. Other bright spots included positive sales in Mainland China during the last three months. (Idol said the fastest recovery is happening in Asia.)

“We continue to see opportunity in [Capri] and expect upward revisions on already inexpensive valuation to prove compelling,” Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets, wrote in a note. “Notably, the Americas sales for Versace and Jimmy Choo were both up [year-over-year] as we continue to expect high-end consumers to help luxury spending in the absence of travel. Additionally, management highlighted positive global retail sales at Versace. We expect revenue to continue its improving trajectory.”
The company ended the quarter with $1.5 billion in long-term debt and $238 million in cash and equivalents. Capri has 1,261 brick-and-mortar units around the globe, including 828 Michael Kors stores, 227 Jimmy Choo stores and 206 Versace stores. Idol said the company plans on reducing its overall store count by closing unprofitable Michael Kors locations.
Capri is not providing forward-looking guidance, but Thomas Edwards, executive vice president, chief financial officer and chief operating officer of Capri, said on the call that the company expects revenues to decline by approximately 30 percent for the year.
“An improvement versus our prior expectations,” Edwards said. 
The fashion group also plans to reduce its exposure to wholesale — from about 30 percent of overall company revenues in 2019 to approximately 20 percent over the next few years — as the company continues to open Versace and Jimmy Choo stores and grow its e-commerce businesses.
“Our feeling is that in North America, digital will represent at a point in time over the next couple of years between 40 percent and 50 percent of the overall revenues for the brands in North America,” Idol said on the call. “[In] Europe, we don’t see that type of trajectory. We see something that will probably get us to a 30 percent level over the next few years. And in Asia, as you know, it’s a much smaller piece of the business today, low single digits. But we do think that that will kind of be in that 10 percent to 15 percent range again, over the next few years.
“The COVID-19 pandemic continues to profoundly impact the entire world,” Idol continued. “As the world continues to emerge from this crisis, we are increasingly optimistic about the outlook for the fashion luxury industry and Capri Holdings. We have an incredible portfolio of luxury houses, each with their rich heritage, exclusive DNA and strong brand loyalty. We are uniquely positioned to drive multiple years of strong growth as we continue to execute on our strategic initiatives.”
Shares of Capri Holdings are down nearly 32 percent year-over-year.