Lululemon sales fall in North America as consumers tighten their wallets

Canadian apparel brand Lululemon reported quarterly earnings that showed sales dropped in North America as many Canadians grapple with the high cost of living.

Canadian apparel brand Lululemon reported quarterly earnings that showed sales dropped in North America as many Canadians grapple with the high cost of living.

This comes as the so-called “k-shaped” economic trend continues, which sees lower-income consumers pulling back on non-essential spending and prioritizing value, while higher-income households increase their wealth and are able to spend more on these purchases.

The Bank of Canada noted in November that consumers overall are more “cautious” amid an uncertain job market and trade war with the United States.

Regardless of consumer incomes, when choosing to buy items like yoga pants and other athleisure staples, Lululemon has been struggling in some regions of the world as the competition continues to challenge the company’s share of the market.

“When Lululemon came to the market, it basically invented the category, right? No one had ever even heard of athleisure before Lululemon,” says Doug Stephens, a retail analyst and founder and CEO at Retail Prophet.

“I think the company really does need to sit down and retool for a new era where they face a very saturated market in their category. They face a different kind of consumer and certainly different economic conditions — so that’s going to take a big rethink.”

At one point, Lululemon was mostly alone in a clothing market that is now saturated with dozens of other brands. These include Alo Yoga, Fabletics and Athleta, while companies like Nike, Adidas and Under Armour have expanded their product lines to compete in the space.

“The perfect pose that the brand used to execute with ease has given way to a much scrappier posture that has been present for quite some time,” said Neil Saunders, managing director of GlobalData Retail, in a written note following the earnings release.