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Lululemon Just Made Its First Investment

It’s making an Amazon-like move.

Photo: Lululemon

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For all its PR disasters, cult-y idioms, and rabid fans, Lululemon is the brand everyone rightfully credits for engineering what has now become the multi-billion dollar fitness apparel industry. Sure, Nike and Adidas sold plenty of sportswear before the Canadian retailer was founded by drama-loving ex-CEO Chip Wilson in 2001, but it was for sports. And Lululemon introduced stylish, expensive fitness apparel that its customers used to make a statement off the mat, too.

Lululemon’s rise has spawned plenty of competition. Sales are down and it’s quickly lost marketshare in the now-crowded space, which is why the brand is looking elsewhere for advancement. It’s initiated a heavy push into growing its menswear business, and on Monday it acquired a minority stake in 7mesh, a Canada-based cycling retailer that sells $300 cycling jackets and $150 shorts. Instead of a full takeover, Lululemon will allow the cycling company to create product at Whitespace, the research lab located in the basement of its headquarters in Vancouver. Product will roll out into Lululemon stores next year.

“We’re always open to unlocking opportunities to fuel our innovation pipeline,” Lululemon CEO Laurent Potdevin says in a press release sent to Racked. “In bringing together 7mesh’s extensive technical apparel expertise and performance-focused mindset with the capabilities of our industry disrupting R&D Whitespace team, we perfectly blend fashion and function to co-create transformational products for our guests.”

Lululuemon’s first investment signals that the brand is moving beyond yoga, a direction its first ad campaign suggested when it launched in May, rebranding yoga as a lifestyle instead of a sport. Branching out into the cycling market certainly makes sense. Technically, skin-tight cycling shorts can’t be worn as easily outside the gym as novelty leggings, but companies like SoulCycle are only just starting to flex their muscles, and Lululemon would be smart to hop on its fanbase.

The move also signals a pivot for the business. Amid fierce competition, Lululemon is looking past its own endeavors and jumping into the investment space — no doubt taking a cue from Amazon. As noted by Fortune, which first reported the investment, Lululemon has a 10-year plan to “generate 50 percent of net new profitability from businesses and product categories where it doesn't currently compete.” Wonder what it’ll buy next.