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Dec. 11, 2019, 7:53 p.m. EST

Lululemon's bet pays off as men's apparel up 38%

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By Charity L. Scott

Lululemon Athletica Inc. built its brand by convincing women to wear its pricey yoga pants even when they weren't headed to the gym. These days, the company says its most promising customers are men.

On Wednesday, Lululemon Chief Executive Calvin McDonald said total revenue for men's apparel grew 38% in the third quarter, citing strong sales of outerwear, pants and underwear. He reiterated the company's goal of doubling the men's business by the end of 2023.

Company executives have told investors that 21% of Lululemon's $3.3 billion in sales last year came from men's products.

As they seek to expand that business, they are hoping to persuade male shoppers that its pants are worth a price tag approaching $200 for the costliest pair.

Lululemon is betting on men like Joseph Frilot. The 28-year-old middle-school teacher says he had been looking for slacks that "looked like dress pants but felt like sweatpants" when he found them at the multibillion-dollar brand. He bought a pair.

"They do have a hefty price for a pair of pants," said Mr. Frilot, who paid $128 for them. "I do want to get one more pair, but the pants are probably all I would buy from them."

Founded in 1998, the Vancouver, Canada-based retailer's emergence was fueled by an ardent following of yoga enthusiasts. The company patented "Luon," a material that gives its yoga pants a soft feel, and expanded into other products from sports bras to work pants and outerwear.

Competitors have since flooded the market with cheaper alternatives seeking to capitalize on the "athleisure" trend, raising pressure on the company to lower prices or expand distribution beyond its own stores and website.

Mr. McDonald, 46, said in an interview with The Wall Street Journal in April that he feels no need to discount and that the company is still in the early stages of growth. The executive said he wants to increase awareness of the brand, which he says still isn't well-known to many customers, and open additional locations in North America and international markets like Europe and China.

Lululemon said Wednesday that overall revenue in the third quarter jumped 23% to $916 million. The company raised its outlook slightly for the fourth quarter to $1.33 billion from $1.32 billion for net revenue.

Shares of the company, which have doubled over the past year, fell more than 4% in after-hours trading Wednesday.

Part of the company's strategy is moving beyond athleisure and into other categories like personal-care products.

Nick Kamenjarin, a 32-year-old attorney, said he has amassed a collection of Lululemon polo shirts, joggers, shorts and tank tops over the past several years. He says he touts the brand to other people and even makes product recommendations.

Mr. Kamenjarin said the first time he went into a Lululemon store, it seemed more focused on women's clothes but he didn't let that deter him.

"The items looked good and they don't have a prominent logo, so most people wouldn't be that familiar with the brand anyways," he said.

Mr. Kamenjarin's wife, Veronica, said she likes that they can shop together at Lululemon: "It's good bonding time."

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