Emerging athleticwear and leisurewear brands like Alo Yoga, Skims, and Fabletics have grown incredibly across the U.S. by keeping up with the changing consumer economy through their savvy use of celebrity marketing.
Related: Lululemon fighting to keep the 'it-girl' title away from competition
Although Lululemon reported earnings per share of $3.15, beating analysts' expectations of $2.93 by 7% in Q2 of fiscal year 2024, the company's American sector has suffered a steep decline.
Lululemon's stock declined 1.07% at last check Friday and has decreased 31.6% compared to the same time last year.
Lululemon's top region underperforms in Q2
The Americas is the company's most profitable region, with a strong presence in the U.S. However, due to the region's underwhelming performance in this fiscal year's Q2, a recent territory expansion might soon replace it.
According to Lululemon's Q2 2024 earnings report, the company's total net revenue increased 8% on a constant dollar basis compared to the same period last year.
Even though the Americas had previously reported the most growth, this year's Q2 net revenue increase was primarily generated by Mainland China, Lululemon's newest regional addition.
China had a strong increase of 37%, the most growth out of all territories.
Although Mainland China was successful, the Americas had a different outcome, reporting a 5% decrease in the company's total net revenue.
In Q2 of this fiscal year, the Americas generated net revenue of $1.7 billion, or 73% of the company's total net revenue, a decline from last year's Q2 net revenue of 78%.
The Americas net revenue increased by 2% on a constant dollar basis, but comparable net sales decreased by 2% on a constant dollar basis compared to the previous fiscal year's Q2.
Two different regions, same marketing strategy
Although Lululemon acknowledges the declining numbers in comparable sales and loss in total revenue in the Americas, the company chose to use the same marketing strategy in China.
Unlike its strongest U.S. competitors, who successfully create brand awareness by collaborating with huge celebrities, Lululemon relies mainly on community events and partnerships with local fitness instructors and influencers.
Although the cultures of both regions are very different, this strategy is evidently no longer working for the U.S.