Urban Outfitters' collection—which features private label items and third-party brands such as Vans and Columbia—has prices more closely aligned with Athleta, whose average price tag is about 13 percent lower than Lululemon, according to Oppenheimer.
It should also be a vehicle for the retailer to further grow its sales, particularly online, Lejuez said.
And it comes at a good time.
(Read more: Cold weather could mean hot sales for these brands)
Despite the company reporting fourth-quarter comparable-store sales growth of 1 percent, same-store sales at its Urban Outfitters brand fell 9 percent and dramatically lagged portfolio standouts Anthropologie and Free People, which posted comparable sales gains of 10 percent and 20 percent, respectively.
Following its recent sales announcement, Stifel Nicolaus analyst Richard Jaffe attributed part of the weakness to fashion misses, calling the women's assortment "too narrow" and "not eclectic nor of the moment."
Citi analyst Oliver Chen said it's also likely the Urban stores experienced margin pressure due to severe winter weather. The brand also caters to a younger shopper than its Anthropologie label, which likely had a negative impact on its sales, Chen said. The retailer reports its full fourth-quarter earnings results Monday after the bell.
—By CNBC's Krystina Gustafson. Follow her on Twitter