Lululemon has a shot at Nike’s spot. But it has to want it.

Lululemon Athletica Inc. has been breaking out of its niche of selling $100 athleisure leggings to offer selections that focus on performance. It could rival sportswear institutions such as Nike Inc. and Adidas AG — if it starts thinking more like an athletic company and less like a fashion brand.

After an earnings call on Thursday, it seems like it isn’t giving the possibility the attention it deserves, but it may want to.

Despite its hold over wealthy suburban moms and their teenage daughters, Lululemon is still vulnerable to the same challenges facing the rest of the apparel industry. Right now, shoppers are buying experiences, not things. While it reported a knockout holiday quarter on Thursday, its share price has tanked as much as 17% since then, the biggest drop since March 2020. Chief Executive Officer Calvin McDonald said American consumers are “a little soft coming into the year.” It expects net revenue to be in the range of $10.7 billion to $10.8 billion, representing 10% to 12% growth from the year before. That falls well below the 19% growth the company reported in 2023.

Lululemon plans to play “offense” by investing in new products and brand initiatives, said McDonald. But where the company goes wrong is in laying out a strategy that leverages its technical innovations in fabrics and materials to ultimately design casual everyday pieces.

Instead, it should use that research to further pursue women’s performance wear — a corner of sports and design that has largely gone ignored by retailers. The overall performance apparel market was worth $101.3 billion in 2023 and is projected to reach $134.3 billion in 2028, according to Euromonitor International. Getting in on that action could help Lululemon keep its business growing outside of casual fashion at a time when demand is slowing. More importantly, it could help loosen deep-rooted gender biases that have defined modern sportswear and culture.

Women’s sportswear has traditionally been handled by either downsizing men’s styles or creating uniforms that are overtly feminine. Think tennis skirts and dresses, uncomfortably tight and revealing shorts and bras for track runners and bikinis for volleyball players. The sports bra itself came about 100 years after the invention of the jockstrap in the 1870s, and there has been little innovation in how sports bras (which are often excessively tight and made out of dense nylon) can be made to better fit the needs of the athletes who use them.

Sportswear is crucial to an athlete’s performance and a deciding factor in whether girls join a sport at all. The right apparel can prevent injuries, help with inflammation, improve fitness and boost confidence. Women athletes have other considerations. For example, swim caps designed for Black women’s thicker and curlier hair, head coverings such as hijabs, and problems that often come with menstruation, such as stains or products showing through uniforms. Women and girls also have to face the glare of the male gaze that either tells them what they’re wearing is too sexualized or too masculine. All this together narrows their agency over their own bodies.

This is where Lululemon is uniquely positioned to create something new. Many independent performance-wear brands are designed for women, such as Rabbit, Oiselle, and Tracksmith. But Lululemon, as a $49 billion company, has the size and influence to become a bigger player in professional sports globally.

To its credit, the company seems to be aware of its potential. It funded a study published this year, which analyzed sports bra underband tightness and its effect on runners’ breathing — an area that had not yet been explored. The study is part of a two-year investment in sports science research centered around women athletes to inform product innovation. Lululemon also designed its first shoe two years ago called the Blissfeel sneaker to compliment female feet specifically and has a new sports bra designed with runners in mind coming out later this year.

When it comes to working with professional athletes, the brand is also not a newbie. It hosted a six-day ultramarathon earlier this month with a dozen professional runners and hobbyists, for which Ultrarunner Camille Herron set a total of 13 records. The Vancouver, British Columbia-based company was also selected to design apparel and accessories for the Canadian Olympic Committee and Canadian Paralympic Committee through 2028. 

Yet, instead of building on that momentum, the company laid out a plan Thursday that focuses more on innovating for fashion. It wants to shift its focus from leggings to shorts and skirts in the second quarter of this year, and it has new yoga leggings coming out this summer made of hydrogen yarn, which is a soft fabric that can hydrate the skin. (While yoga is an athletic activity, the apparel worn for it is often designed for casual wear.) Those all sound like they could be a hit with everyday shoppers, even as they become less interested in buying goods. But it doesn’t break ground on new areas of growth for the company. 

A shift from athleisure wear to performance wear doesn’t come without risks. The company will have to manage research and development investments that don’t cut corners on either their athleisure portfolio or new performance designs. It will also have to out-negotiate giants such as Nike and Adidas for contracts for events and team sponsorships, but that might be an easy hurdle to jump for the woman-focused brand. 

Nike has been accused of enabling abuse of young women athletes and mistreatment of pregnant athletes, while Adidas had to be strong-armed into paying women soccer players the same as men. 

Lululemon would be coming into this as the underdog. But in sports, everyone loves an underdog going for the win.