Who's Dominating Athleisure Right Now And Why It Isn't Giants Like Nike And Lululemon

Sportswear is the fastest growing category in fashion.

But now challenger brands have grown the revenue faster than established companies.

Here in Zurich the brand On, a Swiss sneaker company, is taking on Nike.

The way the shoe looks is like nothing else on the shelf.

Its new spray on technology can make a pair of sneakers in just minutes. The trajectory of them getting to $1 billion in one eighth

minutes. The trajectory of them getting to $1 billion in one eighth the time of Nike.

Meanwhile, Vuori, a Southern California based company, continues to impress investors.

Vuori was really our answer to build product we couldn't find.

The best pair of shorts for guys.

You guys are all sleeping on Vuori.

It's taking share, taking Lululemon's customers, and it's taking Nike's customers. For the first time retailers were actually going out there and looking for emerging high growth brands to take that space.

Nike has fallen behind.

Everyone wants to disrupt. If you're doing a really great job, sometimes disrupting yourself is a bad thing.

It's a very, very fragmented industry.

This is going to be how you're going to compete with all the smaller brands that have come from behind and the customer has fallen in love with.

Nike is the world's largest sportswear brand.

This year, the company is on a mission to get its stride back.

This week, the company posting its first earnings under new CEO Elliott Hill. Nike beating on the top and bottom lines,

Elliott Hill. Nike beating on the top and bottom lines, but its sales fell 8%.

Analysts say it's the beginning of a long turnaround for the company, after what should have been an Olympic gold earning summer.

Nike shocked the market.

Shares of Nike are in freefall after they missed on revenue last night and cut their full year earnings guidance. The shares, down 20%, are on pace for their worst day ever.

The plunge wiped out 28 billion of Nike's market cap.

The stock is cut in half since the all time high in November of 2021.

It's like what's happening is competition eating their lunch. I

mean, that's pretty clear to me. The company blamed its performance on everything from macro challenges to remote employees.

It turns out it's really hard to develop a boldly disruptive shoe on zoom. But experts say this was part of a years long series of strategic

zoom. But experts say this was part of a years long series of strategic errors. When a $50 billion business sees a down 10% quarter.

errors. When a $50 billion business sees a down 10% quarter.

It's not an overnight occurrence.

Meanwhile, net sales of emerging competitors Hoka and On running have both increased over 30% in recent quarters.

Even established rivals like Adidas and Asics have seen growth, while Nike has declined.

Nike has fallen behind, and I think that's illustrative of the fact that they've had a bit of a lull when it comes to innovation.

If you don't have that, then the kind of scale that Nike has achieved isn't worth much if you don't have the growth.

Now all eyes are on Nike's new CEO, Elliott Hill, to turn the company around. Company veteran Elliott Hill is going to come out of retirement like Tom Brady to take the helm. So what happened?

the helm. So what happened?

And can Nike's new CEO get the iconic sportswear giant back on track? Since going public in 1980, Nike's formula of marketing around

track? Since going public in 1980, Nike's formula of marketing around elite athletes helped it become a global superpower.

So what makes Nike special? Well, that's I think, part of the magic of the marketing. So much of retail is storytelling.

Nike dominates or historically has dominated storytelling.

We came back from the impossible, from being broken.

And that storytelling resulted in strong sales.

By 2016, Nike reported annual revenues of $32 billion.

Nike co-founder and former chairman Phil Knight decided he wanted to shift the company's focus towards digital growth before he stepped down as chairman in 2016.

In 2020, former Nike board member John Donahoe replaced Mark Parker as CEO of the company.

Joining me is John Donahoe.

He is the brand new CEO of Nike.

Thank you sir. Thrilled to be here with you. Nike under Parker.

They were hitting their stride when it came to design, resonating with the consumer.

The next wave of growth for Nike was going to be in digital.

Donahoe made sense because his background is as a tech executive.

He was the CEO of ServiceNow.

He was the CEO of eBay, so he came from Silicon Valley.

Under Donahoe, Nike began moving towards a more direct to consumer model, or DTC, by pushing sales directly from its own platforms and stores. What Nike did is they decided,

stores. What Nike did is they decided, let's focus on DTC.

It's a higher margin business.

And of course, they want to keep the best releases for themselves.

And therefore they pulled back from some of their long standing partners, like footlocker, for example.

For a while, the plan seemed like it was working.

In September 2020, Nike reported digital sales growth of 82%, despite relatively flat revenue for the quarter compared to the previous year. Because of Covid, we all went into lockdown and Nike digital online sales were booming.

They were ahead of the game when it comes to retailers selling online because they were first at it and they did extremely well.

Encouraged by the success, Nike began officially limiting ties with retail partners like Dick's Sporting Goods and Footlocker, and cutting others out altogether.

This was a bold move.

As of June 2021, these wholesale partners still accounted for around 61% of Nike's sales.

But Donahoe seemed to double down on Nike's digital push in an earnings call. Donahoe said the consumer is digitally grounded and

earnings call. Donahoe said the consumer is digitally grounded and simply will not revert back.

Here's the problem research shows that DTC doesn't always work the way businesses hope it will. A 2024 study by BMO Capital Markets found that retailers who sell directly to consumers didn't actually see a relative increase in revenue margins or other profit margins.

Everyone thought, oh, if I eliminate the middle person, I eliminate the partner. I'll get their profits. I'll get

their margins. What we showed is it wasn't happening. We realized,

no, you don't eliminate the middle person. You become the middle person. And the middle person isn't necessarily a great place to be if

person. And the middle person isn't necessarily a great place to be if you don't have their scale, if you don't have their expertise.

And so everyone had to absorb all the costs of running those operations. We found those brands did not see a relative improvement

operations. We found those brands did not see a relative improvement in their sales. They didn't see a relative improvement in their profits. It just didn't happen.

profits. It just didn't happen.

What Nike thought was a sales boost from its new digital model may have just been fortunate timing as the world went into Covid lockdown and shopping went virtual in 2021, as lockdowns lifted and consumers started to seek out in-store experiences, Nike's digital growth started stalling.

Internally, the company was undergoing layoffs and cost cutting measures that it said were focused on shifting resources and creating capacity to reinvest in our highest potential growth areas.

It does appear, according to analysts, that Nike overrotated toward the direct to consumer.

And then when it came back, time for Americans and folks around the world to go shopping again after Covid, Nike just didn't have the same kind of priority and placement on the shelves, and it didn't have those styles that were really resonating with consumers. Nike had also pulled back on developing its

with consumers. Nike had also pulled back on developing its running business, during a time when a record number of athletes joined the sport during Covid.

It had a big impact.

Nike previously was really integrated into that running community and always speaking to that community, and that gives you authority and credibility in the category.

They pulled back on that.

At the same time, Nike was also grappling with a slowdown in consumer spending in China.

There's no question that he can blame some of it on macro, but it's the flat line growth in North America which is more suspect and harder to blame on the macro, especially when Adidas is growing its chief competitor because it has more innovative styles that people are really gravitating toward.

It became clear that Nike, not firing on all cylinders on the innovation front, was really when the problem started beginning, and it ceded market share to players, particularly in the running space like on and Hoka.

Everybody wears these.

Yes. This is the Hoka Clifton Nine.

It is the hottest running shoe of the.

Inventory, piled up as consumers started to pull back and turn to other brands. The core problem at the end of the day is that the

other brands. The core problem at the end of the day is that the North American consumer started seeing Nike as being a little bit cheapened because there was such an excess of product.

And this goes back to the idea of when you have too much, you become less interesting, you become less popular, you become less cool. If there's no line outside of a club,

less cool. If there's no line outside of a club, most people aren't walking in. Experts say the lesson learned is for retailers to remember what they do best, something Nike may have lost sight of in its effort to become a tech operation. Being a technology company is not what makes you

operation. Being a technology company is not what makes you special. The mantra of tech is disrupt.

special. The mantra of tech is disrupt.

Everyone wants to disrupt. If you're doing a really great job, sometimes disrupting yourself is a bad thing, and so figuring out how to evolve rather than break, I think, is really important. By early 2024, Nike started quietly returning to wholesale partners.

You're also leaning into wholesale, which is a bit of a change from from Nike. It's been all about direct to consumer. Sell your on

from Nike. It's been all about direct to consumer. Sell your on your website, sell in your stores.

And now there's a shift y.

Coming out of Covid, it was quite clear consumers were also going back into physical retail.

And we recognize that in our movement toward digital, we had over rotated away from wholesale a little more than we intended. So we've corrected that.

intended. So we've corrected that.

We're investing heavily with our retail partners.

Foot lockers relationship with Nike seems to have improved substantially. Nike needs them more than Nike thought.

substantially. Nike needs them more than Nike thought.

That's very important. It ain't just all DTC.

In September 2024, the company announced Elliott Hill would take over for Donahoe as CEO.

Elliott Hill is someone that Wall Street doesn't know well, but internally at Nike.

What I hear is he's known very well and very popular.

This is a guy that started as an intern at Nike, and has now worked his way all the way up to become CEO.

He's a 32 year veteran.

He also came up through the sales channel.

So there are great expectations that he will know what produces a hit and will help turn around the innovation problem that Nike has suffered under John Donahoe.

In its most recent earnings call.

Hill said the company will focus on clearing out excess inventory and reinvesting in sports marketing.

We lost our obsession with sports moving forward.

We will lead with sports and put the athlete at the center of every decision. This is not a story that six months from now we're going to

decision. This is not a story that six months from now we're going to be caring about. This is going to be an 18 month plus.

Show me how you're going to compete with all the smaller brands that have come from behind and the customer's fallen in love with.

They need to re reinvigorate.

They need to remind people that Nike is special.

And so I think if I'm Elliott right now, I think what I'm doing is I'm going back to my product people. And I'm saying, I don't know what you've been working on in the past. Maybe you have something new, maybe you don't. Let's see, what is this innovation pipeline?

you don't. Let's see, what is this innovation pipeline?

And as soon as we can start telling people we have good product, then we will put really good marketing.

Why does Nike win? Well, Nike has the largest research and development budget and Nike has the largest marketing budget. Last time

I checked, winning is winning.

As long as. They use that effectively, it's very hard to compete against. It doesn't mean that new brands can't emerge. It

compete against. It doesn't mean that new brands can't emerge. It

doesn't mean that new brands can't take some share, but it means that Nike should always be able to get it back, as long as they have their eye on the ball.

Here in Zurich, a Swiss sneaker company is taking on Nike.

We couldn't be happier for where we are as a brand after 15 years.

And, it all started quite simple actually.

The brand On sells premium-priced athletic wear and is quickly gaining ground on legacy competitors.

The way the shoe looks is like nothing else on the shelf.

I think that the problem with Nike is On Holding.

I'm not kidding. This is the first true challenger to Nike.

Since going public in 2021, the company's net sales have grown in 11 out of the past 13 quarters, and On's stock price has soared ahead of its competitors.

In its most recent earnings report, the company posted net sales of over $865 million for the quarter.

The company is growing like a weed. We all know about the running shoes, which everybody's gaga for, and they're just expanding the brand. At the same time, On's biggest competitor,

brand. At the same time, On's biggest competitor, Nike, has faced stalling growth.

As of March 2025, Nike posted a sales decline in two of its last four quarters.

Adidas has also faced challenges in recent years and has ended its controversial partnership with Kanye West.

But, On is also under pressure as tariffs proposed by the White House threaten to raise prices.

In 2024, the U.S.

accounted for almost 60% of On's revenue.

Around 90% of On's products are manufactured in Vietnam, which President Trump has said could face a 46% import duty.

Nike is also undergoing a turnaround under its new CEO, Elliott Hill. The company is aiming to win back market share it lost

Elliott Hill. The company is aiming to win back market share it lost during the past few years.

Nike's biggest threat is if Nike spends 1% of their sales on marketing and On spends 1% of their sales on marketing.

That's the difference of billions of dollars. So,

you're going toe to toe with someone that has a much bigger megaphone. So, how did On go from a startup to becoming one of the

megaphone. So, how did On go from a startup to becoming one of the biggest global challengers in sportswear?

And can the company maintain its rapid growth despite pressure from tariffs and competitors?

CNBC visited On's headquarters in Zurich to get a behind the scenes look at the company and how its new spray-on technology can make a pair of sneakers in just minutes.

It allows us to produce an upper material in a completely automated way. Marc Maurer is one of On's co-CEOs.

way. Marc Maurer is one of On's co-CEOs.

We have one single material that is approximately one mile long, which is being sprayed around the last.

One shoe is made in just three minutes, a fraction of the time it takes to create a traditional running sneaker. A traditional product is usually touched by approximately

sneaker. A traditional product is usually touched by approximately 200 hands, and it's going through various various steps, and it consists of many, many different individual parts, which is very, very different. The technique is still in its early stages, only producing a limited number of shoes in one style.

The model doesn't have any laces, and it sells for $330.

What we want to be able to do is to bring it from a couple of thousand pairs to millions of pairs.

But, analysts say what has propelled the brand is the unique design of its main running shoe line, which feature large hollow pads in the sole that provide extra cushioning. My absolute ride or dies are the On Cloudmonsters.

cushioning. My absolute ride or dies are the On Cloudmonsters.

They are my favorite shoes of all time, and I only got them a few months ago. So, this might be the new daily trainer.

months ago. So, this might be the new daily trainer.

When you look back into 2010, all the running shoes looked more or less the same. So, basically you could almost not compare what an ASICS is, or a Brooks is or a Sauconys.

We thought about how can we stand out?

But, On shoes weren't always taken seriously as high-end performance products. When they first started, they were basically giving the

products. When they first started, they were basically giving the product to anybody that would take it. The first generation of running shoes that was intended to be a performance shoe was not received as such, and the feedback that we heard from retailers as well as consumers was that it was more of a lifestyle shoe. It was comfortable, it was nice to wear for daily use, but it was not highly rated for

serious runs. To elevate its brand image On doubled down on

serious runs. To elevate its brand image On doubled down on performance and company-owned stores.

The strategy to engage both serious athletes and casual wearers seems to have paid off in 2024.

Olympic medalist Hellen Obiri won the Boston Marathon in the then-unreleased LightSpray shoes. I think the main thing that they really understood was they went for the esthetic of the shoe.

That is what drove the initial success. The trajectory of them getting to $1 billion versus Nike.

They did it in one eighth the time of Nike.

So, Nike better wake up and realize that On is a performance shoe that has also taken on a fashion element.

Analysts say another factor driving sales is that On's products are geared towards wealthy shoppers. A typical pair of its running shoes sells for $150 or more.

They're not interested in ever having a low-end price point and ever being in low-end retail, so they're well situated there because people are willing to pay more for a pair of running shoes because they have more use cases for them, and they see it more as an everyday shoe.

The company has also been able to attract new customers through partnerships with athletes like Roger Federer, as well as celebrities like Zendaya and FKA Twigs.

It has also partnered with luxury brands like Loewe.

We're often playing in a more premium space, almost a little bit in the space where Nike stops and, but not luxury is not yet.

Analysts say that timing played a key role in On's rapid rise.

During Covid lockdowns, recreational running increased and athleisure boomed. Athletic shoe usage just picked up dramatically.

athleisure boomed. Athletic shoe usage just picked up dramatically.

We were at home. We were doing more sports, going out for walks more.

We weren't dressing formal for about two years, right? It was luck as well as design that got them that huge

right? It was luck as well as design that got them that huge scale. Around the launch of On's IPO,

scale. Around the launch of On's IPO, Nike also aggressively scaled back retail partnerships with Macy's, Footlocker and Dick's Sporting Goods.

It does appear, according to analysts, that Nike overrotated toward the direct-to-consumer. And then,

when it came back, time for Americans and folks around the world to go shopping again after Covid, Nike just didn't have the same kind of priority in placement on the shelves, and it didn't have the styles that were really resonating with consumers. So, for the first time,

with consumers. So, for the first time, retailers were actually going out there and looking for emerging high-growth brands to take that space, and On was right there for them. So, it happened to be very serendipitous for them to be able to get that retail space, prime retail space that the number one competitor had voluntarily just dropped and left for them to gain.

Meanwhile, On continued to post quarterly revenue beats, boosting its stock. Deckers-owned Hoka also surged, while Nike declined.

Nike has since kind of acknowledged that mistake through their actions and are trying to go back to that channel.

On effectively acknowledges that that was a big break for them.

The issue now, though, as it relates to sort of the broader competitive space, is that they've already been given that oxygen. Nike still owns 40% of the global sports footwear market,

that oxygen. Nike still owns 40% of the global sports footwear market, followed by Adidas.

On makes up a little less than 3% of global market share.

But, that share has increased eightfold since 2019.

Anyone who says they're not worried about slipping of market share is lying to you or me, or both.

People care about market share, but that doesn't mean that they're worried they're not going to get it back. Nike has a new CEO, has been tasked with a with a turnaround plan at that company.

There's an expectation, at least among investors, that at some point it starts to grow again. What does that mean for On? It

doesn't change what we do.

Um, so we focus on our products, on innovation.

Nike is also returning to retail stores, and in April 2025, Adidas posted revenue growth of 13% compared to the same quarter last year.

CNBC reached out to Nike and Adidas for comment, which did not respond by the time the story went online.

For On, apparel could be the next growth frontier.

Nike and Adidas make up over a quarter of their revenue from t-shirts, shorts and other apparel items. Currently, On's clothing offerings make up a little over 4% of its business. On also plans to double its store count from 53 to 100 in

business. On also plans to double its store count from 53 to 100 in the coming years. Currently, the company has 11 stores in the U.S. But, could those expansion plans be impacted by tariffs?

U.S. But, could those expansion plans be impacted by tariffs?

On designs its products here in Switzerland.

But like other major brands, including Nike, most of its products are manufactured in Vietnam and Indonesia, where labor is considerably cheaper than in Europe or the U.S. In April, President Trump announced tariffs on both countries.

I will sign a historic executive order instituting reciprocal tariffs on countries throughout the world.

Both of these have been suspended and it's unclear if they will remain in place. Any additional cost could be a significant headwind for the sportswear industry. Sportswear giant Adidas now saying that tariffs would result in price hikes for all of its U.S. products. People thought if we go to Vietnam,

its U.S. products. People thought if we go to Vietnam, we're safe. And, it was just dead wrong.

we're safe. And, it was just dead wrong.

One of Trump's goals is to move production domestically, but experts say that is highly unlikely, especially for sneakers, a high-cost, labor-intensive item.

Then, there's the question just what does labor cost? And

invariably labor in the U.S.

is, I imagine, in most places, going to cost more than it is in a lot of other places. Andrew, we are not going to make sneakers in the U.S. You can't move your supply chains overnight.

We just don't really have the ability. We don't have the labor force. We don't have the the capabilities.

force. We don't have the the capabilities.

We don't have the materials to start up a this industry at scale in the United States. On has not shared whether it plans to move production due to tariffs, but says the cost may be passed on to the consumer. And if that happens in the end, I think we will try to bring the best possible offering to our consumers. On is a premium brand.

consumers. On is a premium brand.

On has pricing power in the market, and so most likely what you will see in the industry is that tariffs will just be passed on to the consumers over time.

Analysts say On may be well positioned to withstand the impact of tariffs, and the brand's success hinges on maintaining its edge.

They're already thinking about becoming a 10 billion franc brand, and what's beyond that? This is, I think, still kind of early innings for the brand at this point. For over a decade, Canadian based activewear company

point. For over a decade, Canadian based activewear company Lululemon has dominated the athleisure industry that it helped pioneer. But now the sector is flooded by challengers and the

pioneer. But now the sector is flooded by challengers and the competition is majorly heating up.

Vuori just raised $825 million in funding last week, taking its valuation up to 5.5 billion.

Newcomer Vuori is rising to the challenge and making big moves as Lululemon missteps.

We don't believe that Alo or Lulu necessarily needs to lose in order for us to win. We think that this is a growing market.

They're challenging the legacy players of Athleta and Lululemon, and they're bringing a lot of excitement to the market. It's

taking share, it's taking Lululemon's customers, and it's taking Nike's customers. The private direct-to-consumer company became profitable in under three years, and as of December 2024, counts 79 stores in six countries, including the U.S.

It continues to impress investors, raising more than $1.2 billion in total. So how is this challenger brand shaking up the athleisure

total. So how is this challenger brand shaking up the athleisure industry, and is that enough to take on Lululemon?

Vuori, a Southern California-based company, is only a decade old.

Its CEO, Joe Kudla, a former model and accountant, came up with the idea after getting into yoga and being disappointed by what workout gear options were available for men. Baggier fits big logos, kind of shiny synthetic materials.

It just wasn't product that I wanted to wear, and it wasn't product that a lot of my friends wanted to wear. Vuori

was really our answer. It was. it was to build product we couldn't find. The brand took off during the pandemic as comfort became king,

find. The brand took off during the pandemic as comfort became king, joining an influx of other startups hoping to capitalize on the moment.

But Vuori quickly differentiated itself and between December 2019 and December 2020, grew both sales and customers by nearly 300%. It focused on profitability from the very

nearly 300%. It focused on profitability from the very beginning. It didn't care about growing to these exponential

beginning. It didn't care about growing to these exponential heights at any cost.

It wanted to take the slow and steady approach.

In 2021, venture capital fund SoftBank invested $400 million, placing Vuori's value at ten times its revenue, and the investment was a hefty $300 million more than in 2019.

There has only been a couple of companies that have achieved a similar kind of valuation, so it was notable for what was at the time somewhat unknown, but high growth brand to achieve that kind of valuation from a prominent investor like that. 2021

was a big IPO year and a record peak for the equity markets in general. Valuations were at an all time high,

general. Valuations were at an all time high, but those figures have pulled back in 2024, including for legacy companies.

Today, investors are much more cautious as consumer discretionary spending has gone down and there's the potential tariffs by an incoming president. Meanwhile, Vuori scored $825 million in

incoming president. Meanwhile, Vuori scored $825 million in private equity funding in November 2024, taking its value to $5.5 billion.

It's one of the largest valuations ever for a private apparel company.

It is a notable investment both from a valuation perspective from the investors who are investing behind it and the growth.

It's going to support the company going forward. For Vuori to be able to go from $4 billion in 2021 and to be able to grow to $5.

5 billion in 2024, at a time when money has all but dried up for things like discretionary consumer companies, it's remarkable and it really stands out in this space.

While remarkable, Vuori's full year 2023 revenue was an estimated $320.8 million, competitor Lululemon's was $9.6 billion. Though Lulu has faced a slowdown,

billion. Though Lulu has faced a slowdown, it's still delivering massive sales.

Its stock rose 9% after close on December 5th, after reporting better-than-expected earnings for Q3 2024, mainly due to healthy international sales.

Sportswear is the fastest-growing category in fashion, and the fight for market share between competitors will intensify in 2025, according to McKinsey.

Challenger brands, which include Vuori, have grown their revenue faster than established companies while increasing profitability and are set to generate more than half of the segment's profit in 2024, up from 19% in 2020.

You see Lululemon at the top and then everybody else trying to get a piece of that. What I would say is that leaves plenty of room, right, to encroach either on Lululemon's position or it's a very, very fragmented industry.

Now, Vuori is on the cusp of an IPO and has slowly filled its team with veterans who have experience running public companies.

But unlike many private companies, it's not desperate for funding and can take its time. Plus, the latest investment was structured at what's called a secondary tender offer, where the original investors sell their shares to new shareholders, resulting in a big payday, which is what an IPO would achieve.

Still, that would make it the only one of Lululemon's direct rivals to go public. It would kind of be like a stamp of approval,

go public. It would kind of be like a stamp of approval, and then it's like, I'm here to stay and I'm here to take over. And I could really be a disruptor in this category.

take over. And I could really be a disruptor in this category.

Vuori started with men's products in an industry largely focused on women. Its first best seller was a pair of men's shorts that are still

women. Its first best seller was a pair of men's shorts that are still sold today, and that success led the company to launch pilot programs with wholesalers Rei and Nordstrom.

If you're a brand that's good enough to be sold in REI and Nordstrom, that customer is going to remember that brand.

And then when you have your own website and your own store, might be willing to go there and shop there too. When you build that kind of, you know, awareness in the men's business and then you have these hero products, you can actually get scale and economies of scale versus trying to be kind of everything to everyone.

High quality and comfort are cornerstones of Vuori, and the products have stood out to consumers, turning them into brand evangelists.

Even though the company rarely offers discounts or s ales.

I think I may have found the best pair of shorts for guys Vuori daily. Leggings are so comfy.

daily. Leggings are so comfy.

You guys are all sleeping on Vuori.

The company has been strategic in its marketing, being an early adopter of social advertising and getting early sponsorships with college and professional athletes.

Products are now sold at several high-end retailers.

Vuori is absolutely trying to steal the Lululemon customer.

They're going after the same kind of customer base, the people who are going to the gym, people who have active lifestyles and the people who blend performance with lifestyle, right? We want to be where our customer is shopping for this

right? We want to be where our customer is shopping for this category, and we like to compete on the quality of our product, the differentiation of our product, and the differentiation of our store experience as well.

Kudla's leadership has majorly influenced how the company has grown too. Because he was seeing things differently and thinking in

grown too. Because he was seeing things differently and thinking in a non-incumbent way. He had trouble raising money. He then had to find ways to do more with less. He forced focus.

I'm going to not spend as much time or resources on X, Y or Z and really overcommit to the things that I think are going to matter at first, which are kind of product and marketing. Expansion has been thoughtful.

marketing. Expansion has been thoughtful.

The company has often opened stores near Lululemon. It added 20 US locations in 2024 and is growing internationally, with new stores in London, Shanghai and Seoul opening this year. The goal is 100 stores by 2026.

year. The goal is 100 stores by 2026.

Going public would help it get there. Globally,

Lululemon has more than 700 locations and Alo, north of 100. Jewelry has been on a faster pace of growth in most of the others. Alo is doing very well as well.

the others. Alo is doing very well as well.

But longer term, when you look out ten years, 20 years will Vuori be already be, you know, the number two player. It's hard to say now, but they will be significantly bigger than they are today for sure. As Vuori scales, there are

sure. As Vuori scales, there are some risks. One being quality.

some risks. One being quality.

The thing that consumers of Vuori are most concerned about is, is the quality of the fabric going to fall? Are they going to water down the brand that I love in exchange for growth?

Though Vuori has been successful so far, there's still a big question as to whether the brand can keep up with this growth, something that's been an issue for rivals.

Another challenge is innovation in a category where each company's products are highly similar and encroach on each other's territory.

Lululemon plans to double its men's business by 2026.

That's what's so often good retailing comes down to is really, really great product. If you can innovate and differentiate yourself based on the fabrics that you're using and the fit and the quality, then that is going to make you stand out in a crowded athleisure space. And beyond good product, Vuori is still fighting for brand

space. And beyond good product, Vuori is still fighting for brand recognition, which sits in the low double digits.

Vuori is still, on a relative basis, unknown. It probably has lower awareness than Alo.

unknown. It probably has lower awareness than Alo.

Part of the success they're having is their consumers are coming back and buying more from the business, which for any business is kind of the mark of success.

There's no way Vuori's coming for Lulu's lunch. It's going to take a lot more time for it to come anywhere close to Lululemon, even if Lululemon is ceding just a little bit of share. Still,

Vuori has already come a long way from an e-commerce men's company to Lululemon competitor with real stores in six countries, and its early and calculated success may be an indicator of where it's headed. To go from someone who was struggling to get funding kind of ten years ago, to someone who is probably actively turning away funding at some points now, is definitely a validation of their vision and kind of the business

that they built. And so now they just have to continue doing that.