As most of the fashion world scrambled to survive an apocalyptic downturn brought on by the coronavirus pandemic, activewear label Lululemon’s share price rose to an all-time high last month.

The originator of pricey yoga leggings, and other activewear that often doubles as daywear, has been an early winner of what is expected to be a years-long financial crisis. Consumers stuck at home are still in the market for flattering comfort clothes, like the brand's velvety-soft "Align" leggings, which some customers collect by the dozens.

The current state of the world solidified Lululemon’s position at the top of the athleisure totem, a trend the company all but created, and which fuelled its growth over the last two decades. It has underscored the company’s achievement of a rare and elusive prize: enduring brand value.

But Lululemon’s rise to the top of the burgeoning activewear sector — with the sports apparel market projected to top $200 billion this year, according to Euromonitor International — has not been without its challenges. Growth has been marred by successive scandals over quality, culture and leadership that broke just as competitors muscled in on the company’s home turf with look-alike products at cheaper prices. Its yoga leggings became a part of an ubiquitous uniform that also included Uggs and a Starbucks cup, derided by some as a means to signal fitness without actually exercising and teetering on the brink of fashion irrelevance. (The look earned the derogatory term “basic bitch,” adopted by critics and satirists across the internet.)

But love for Lululemon remained strong among core customers — who proudly wore their leggings in the studio and out — who swear by the comfort, performance and style they offer. The maverick leadership of Founder Dennis J. “Chip” Wilson had helped Lululemon establish a sticky sense of community that still endures. It’s been a highly effective tool to sustain and grow the brand’s strength in spite of turmoil at the top. At the same time, the company has always eschewed wholesale and discounts, protecting it from some of the retail disruptions of the last decade, while its focus on technical design helped it retain some differentiation as competitors piled into the burgeoning market for athleisure.

Early adopters' habit of wearing their Lululemon leggings to brunch turned out to reflect a deeper, longer-lasting lifestyle trend, not just a fleeting fashion trend. Indeed, now it's just the way people dress, particularly in a work-from-home era where comfort is king.

Today, as the coronavirus continues to upend life, work and the economy, the company now looks among the best-placed apparel retailers in the world. While the fashion industry as a whole is facing a bleak outlook, demand for activewear has remained comparatively robust. The brand ranked among The Financial Times' top 100 companies prospering in the pandemic. It has added roughly $10 billion to its market capitalisation this year.

Lululemon is not immune to the current market uncertainty, of course. Sales fell 17 percent in its fiscal first quarter. Though most of its stores affected by pandemic-induced lockdowns have now reopened, the prospect of having to close again in certain locations remains very real. Its share price is off the all-time high reached last month and, like the rest of the fashion world, it must find a way to navigate the fresh focus on structural racism and a lack of inclusivity within the industry — an area where the brand has had its share of missteps in the past.

BoF’s latest case study examines how Lululemon built the world’s leading brand in a new category, and where the company goes from here.

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