Peloton takes on Lululemon with private label apparel brand

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Peloton shares have popped more than 6% in Thursday's trading session as the fitness equipment maker is looking to grow its market share in the athletic wear space with the launch of a new private label apparel brand. 

TickerSecurityLastChangeChange %
PTONPELOTON INTERACTIVE, INC.105.30+7.80+8.00%
LULULULULEMON ATHLETICA, INC.424.28+43.43+11.40%
NIKEn.a.n.a.n.a.n.a.
ADDYYADIDAS AG176.25+0.35+0.20%

Peloton first began selling apparel in 2014 and has previously partnered with brands including Lululemon, Nike and Adidas on seasonal offerings. However, Peloton Apparel will be the company's first collection featuring items from its own private label line. 

LULULEMON SHARES JUMP, WOMEN'S AND MEN'S SALES DRIVE RESULTS

Peloton Apparel's Fall 2021 collection will feature a mix of of men’s, women’s and gender-neutral styles and accessories ranging in price from $15 to $118. The company noted its members and instructors wear-tested the collection to ensure every style is "high-performing and body-inclusive."

"I couldn’t be more thrilled to officially launch Peloton Apparel, a brand that has been influenced by our amazing instructors and at its core is centered around supporting our Members," Peloton’s vice president of Apparel, Jill Foley, said in a news release. "With each collection, we’re offering reliable pieces that support your sweatiest days, your busiest days, your rest days and beyond. Our goal with this brand is to enhance our Members’ lifestyles, not just one part of their day."

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The announcement comes as Lululemon shares have hit an all-time high Thursday after the company posted strong second-quarter earnings on Wednesday.

Lululemon is expecting revenue for fiscal year 2021 in the range of $6.19 billion to $6.26 billion and diluted earnings per share in the range of $7.16 to $7.26. On an adjusted basis, the company forecasts earnings per share in the range of $7.38 to $7.48.

On Lululemon's second quarter earnings call Wednesday, chief executive officer Calvin McDonald touted a 63% revenue increase in its North America business and a 49% increase in its international business. Despite supply chain challenges, Lululemon's women's and men's businesses saw revenue growth of 26% and 31%, respectively, on a two-year basis.

McDonald added that Lululemon will surpass its 2023 revenue target two years ahead of schedule and that it is on track to double its men's business and quadruple its international business by 2023.

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Peloton's new apparel offering comes as the company posted a wider than expected net loss of $312.2 million, or $1.05 per share, for its latest quarter. However, the company's revenue jumped 54% year-over-year to $936.9 million.

The company issued a recall of all its treadmills in May after initial resistance following reports that one child died and several were injured by the Tread+ model, which was a step up from the original Tread model. Peloton also temporarily stopped selling the machines, which contributed to the revenue hit.

Peloton recently dropped the price of its bike from $1,895 to $1,495 in order to make the product more accessible. The company had already lowered the price of its bike last year by $350 following the rollout of its Bike+ model, which sells for $2,495. Subscription services for the bikes cost $39 and $59 per month, respectively.

TickerSecurityLastChangeChange %
VSCOVICTORIA’S SECRET & CO.61.98-1.53-2.42%
LEVILEVI STRAUSS & CO.26.47+0.03+0.11%

Other retailers who have made moves in the athletic-wear space in recent months include Victoria's Secret and Levi Strauss. 

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