Athleta to move into Canada

Retail dive

Dive Brief:

· Moving squarely into rival Lululemon's home turf, Gap Inc. on Tuesday said it will bring Athleta to Canada this year, the activewear brand's "first company-owned expansion outside the United States."

· Athleta will debut in the country online this summer, then open retail stores at Yorkdale Shopping Center in North York, Ontario, and Park Royal Shopping Centre in West Vancouver, British Columbia, in the fall, according to a company press release.

· The effort is part of its plans "to open between 20 and 30 stores a year across North America," the company said. Athleta now runs more than 200 stores in the U.S.

Dive Insight:

Gap Inc. has had grand ambitions for its activewear line, then a catalog retailer with a loyal following that the company acquired in 2008 for $150 million.

While the brand is dwarfed by its siblings Gap (556 company-owned stores in North America) and Old Navy (1,220 stores), it's rising fast. Last year the brand topped $1 billion in net sales and notched 16% annual sales growth, the company said Tuesday, reiterating its goal of growing Athleta's net sales to $2 billion dollars by 2023.

Analysts also see Athleta as a possible growth driver for the apparel conglomerate, which has seen its namesake brand and Banana Republic falter for years now and even Old Navy struggle from time to time. The brand has come out strong with marketing centered on female empowerment and inclusion — the latter backed up by its work to extend sizing across its collection.

In March, MKM Partners Managing Director Roxanne Meyer listed the brand's sizing initiative and as-yet-unspecified geographic expansion as potential catalysts.

Its entry into Canada, home of Lululemon headquarters, is at least a symbol of the brand's willingness to take on a powerhouse in the activewear/athleisure realm: Lululemon's revenue reached $1.7 billion, and gross profit topped a billion dollars in the fourth quarter alone.

While Lululemon hasn't offered much inclusion-based marketing beyond attempting to repair derogatory remarks by its founder years ago, the brand does have its own ambitions. That includes expanding into men's a few years ago, something Athleta seems unlikely to pursue.

To capitalize on the at-home workout trend that has exploded during the pandemic, Lululemon acquired Mirror last year for $500 million. Last month, the company said it will open 40 to 50 new stores globally, according to an earnings call transcript from Motley Fool.

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