Is this Alo Yoga’s moment?

It’s a great time to be Alo Yoga.

The 16-year-old brand, known for its Airbrush leggings and a wide variety of crop tops, has long been the fashion authority in an athleisure category dominated — and arguably invented — by Lululemon. But the retail giant suddenly looks vulnerable. It downgraded its earnings forecast in January, prompting Bernstein analyst Aneesha Sherman to downgrade her outlook for the company, saying a “reality check” was needed.

Lululemon still has size on its side: It has nearly 500 locations and nearly $8 billion in revenue last year, to Alo’s 34 stores, and $200 million in sales in 2020, the most recent year the company has released financial data. . It has a lock on the main client. But it’s Alo that’s got the cool factor – Bella Hadid, Kaia Gerber and Justin Bieber wear the brand, which debuted its ski collection at New York Fashion Week last fall and has a virtual “shelter” in Roblox.

And with a new post-pandemic activewear chapter at its inception, things are looking good, analysts say.

“As each dominant brand becomes more ubiquitous, early adopters will look elsewhere,” said Simeon Siegel, managing director and senior analyst at BMO Capital Markets. “Brands like Alo are waiting there with open arms.”

Alo has big plans to meet right now. Long before Lululemon’s sales growth began to slow, the Los Angeles-based brand had plans to more than double its store count this year, including expanding internationally (the brand has four stores in the Middle East, with more openings planned in Malaysia, Mexico and Thailand). Where most existing locations are in California, New York or affluent enclaves like Aspen, the goal of this next retail push is to make Alo a ubiquitous sight across the US and eventually the world.

“Basketball or American football is not a global sport, but mindfulness and wellness is a global concern,” said Danny Harris, co-founder, owner and CEO of Alo Yoga. “In fashion, that has universal appeal.”

Alo may have carved a niche for itself with its coastal boutique fitness set, but global dominance is another matter. Lululemon’s growth is slowing, but it’s not going anywhere. The demand for sports activities remains strong, but is not increasing as in the first two years of the pandemic. From August to November 2020, Alo has grown over 200 percent year-on-year since 2019 and has continued with either triple-digit or high-double-digit growth ever since. In December 2022, the brand saw 56 percent year-over-year growth, according to Earnest Analytics.

In a fragmented market with many competitors, the most likely scenario is that no company comes out on top.

“The future of the market is many different brands that appeal to different cohorts,” said Jason Goldberg, head of commerce at advertising giant Publicis. “Alo has a great example of being one of the leaders in this new model, but it’s not on the same scale as everyone wearing the exact same yoga pants.”

Studio on the street

Alo – which stands for air, land and ocean – was founded in 2007 by close friends Harris and Marco DeGeorge, who remain co-owners and co-CEOs. Both had found solace in yoga to cope with various ailments — DeGeorge recovering from a back injury, Harris dealing with anxiety.

This idea of ​​harnessing the restorative powers of yoga, particularly around mindfulness, while not exactly revolutionary, helped define the brand in the minds of consumers. It continues to play an important role: its shops, for example, are called “shrines”.

The approach to fashion was also key. Wellness was already ubiquitous in the fashion and beauty sets when Alo launched (Gwyneth Paltrow founded Goop a year later). Alo helped establish the connection and also jumped on board with the “studio on the road,” Los Angeles-centric approach to yoga culture.

“We didn’t want to feel like we were so granola,” Harris said. “We wanted to give him more of an edge down the road.”

Yes, Alo carries plenty of crop tops and sports bras that would be more at home in a cocktail bar than a fitness studio. But it has also made an effort to align itself with a more high-fashion crowd beyond product. Alo’s high-profile partnerships outside of the gym, landing stars like Kendall Jenner in ads. It launched skin care — the Alo Glow System — in December 2020, and in September 2021, it announced it will serve as the first official “wellness partner” for New York Fashion Week, hosting yoga classes and a sound bath at Spring Studios, where many performances take place, and aura photography and astrological readings are offered for attendees. He reprized this role in 2022.

“It gives something attractive over a model that’s already worked,” Goldberg said. “What Alo does is take the comfort and utility of that model and then add visual distinctiveness and aspirational branding that says something about you when you wear it.”

What’s next

Alo has also fallen into fashion-friendly tech trends. It allows customers to make purchases in cryptocurrencies, and in June said it would give some employees the option to be paid in cryptocurrencies. The brand hosts meditation sessions and yoga classes in the metaverse. Some of his more expensive items, such as the Aspen ski collection, come with a digital version of the garment.

“There are many benefits to creating these experiences because it creates loyalty and excitement about a product, which naturally translates into sales,” said Angelic Vendette, global chief marketing officer of Alo Yoga. “But then it also creates a connecting experience between our brand and our community.”

It’s also another way to connect with luxury consumers. Alo’s pricing is comparable to Lululemon’s: a pair of leggings can cost anywhere from $98 to $138, at Lululemon it’s $98 to $128. Offering experiences such as Alo Wellness Clubs, which host yoga classes and light spa treatments, new additions such as a private client manager or working with wholesale partners such as Shop at Equinox act as differentiators.

Although Alo still has yoga in its name, it now offers clothing for activities that might appeal to a like-minded consumer, such as tennis and skiing. A footwear collection is coming soon, Harris said.

Despite the crowded market, there’s no denying that Alo has built something that resonates with a crowd that wields serious trend-setting power. And there is an appetite for more. Apart from the expansion, the brand also aims to strengthen its presence around the world. Alo currently ships worldwide, but only operates three stores outside the US, and most of its locations are in coastal cities or other major metropolitan areas.

“I was in Dubai and I would say I saw more Alo bags than Chanel bags and we don’t have a store in Dubai.” Harris said. “Maybe we are the brand for the next generation.”