Lululemon unveils its line of personal-care products as it tries to grow beyond apparel

Key Points
  • Lululemon launches a line of personal-care products, including a dry shampoo and a deodorant.
  • The retailer, known for its women's athletic apparel, is venturing into new categories to expand its business.
  • Lululemon shares are up more than 50% year to date.
Lululemon launches a line of body-care items including a face moisturizer and lip balm.
Source: Lululemon

Lululemon knows that where there's exercise, there's sweat.

In an effort to grow beyond its core apparel business, the maker of trendy yoga pants and patterned sports bras began on Tuesday to sell personal-care products in 50 stores and online. The lineup includes a dry shampoo, deodorant, face moisturizer and lip balm.

Lululemon is already seeing explosive growth. Traffic in its stores was up 8% during the latest quarter, while digital sales surged 35%, surpassing expectations. And while analysts aren't anticipating that momentum will slow down soon, Lululemon is showing there's plenty room to thrive in new categories.

"The main driver continues to be our core categories across both men's and women's," like leggings and jogger pants, CEO Calvin McDonald told analysts this month. "However, we've identified several areas of white space, where we can test the waters and bring innovation to our guests."

Stocks rally, Beyond Meat dominates, Lululemon stretches out and our phones are creating "text neck"
Beyond Meat soars, Lululemon stretches out and phones are altering our skeletons

In addition to its new body-care line, Lululemon has also hinted at launching its own line of shoes.

Investors love it. As of Monday's market close, Lululemon shares are up more than 50% year to date, bringing the company's market value to nearly $24 billion. Nike shares, by comparison, are up nearly 11%, pushing its market cap to just over $129 billion. The S&P 500 Retail ETF (XRT) is up only 2.9%.

"We believe that the athletic industry remains one of the bright spots in a tough retail environment, and Lululemon has some of the strongest momentum and visibility within the sector," Wells Fargo analyst Ike Boruchow said in a research note.

Lululemon's dry shampoo will cost $34. The deodorant is $18, the face moisturizer is $48 and the lip balm is $14. These first three items are also available in travel sizes.

Buzz is building around the summer opening of a new type of Lululemon store in Chicago.

The retailer is finishing a massive, 20,000-square-foot store in the Lincoln Park neighborhood that will include yoga studios, a juice bar and space for meditation. By 2023, about 10% of its bricks-and-mortar stores will be considered "experiential," like the new Chicago store, Lululemon has said.

"What Lincoln Park will allow us to do is to bring a lot of those experiences inside the four walls, into the community on a consistent basis," McDonald told analysts. "This, we believe, could become just another mix within our portfolio of how we go into a market and deliver our experience to our guests. But it's a test ... we're going to learn and we'll go from there."

Jim Cramer: Lululemon is the best of all the retailers
Jim Cramer: Lululemon is the best of all the retailers