Fabletics, the privately-held athleisure retailer owned by ShoeDazzle and JustFab parent company TechStyle Fashion Group, currently operates 25 stores in the U.S. and recently announced plans to open 75 new stores across the U.S. and internationally, bringing its total to 100.
With same-store sales growing at 20% year-over-year and annual revenue exceeding $300 million, Fabletics is a retail success story. Adam Goldenberg and Don Ressler, co-CEOs of owner TechStyle Fashion Group, are the driving force behind the scenes. Recent new hires Karen Pornillos, from the yoga clothing company Lululemon, and Nancy Arnold, from Victoria's Secret, bring additional talent to Fabletics.
Fabletics began as a digital savvy, pure-play e-commerce retailer in 2013 and wisely chose to make Kate Hudson its cofounder. With a loyal following built up from her successful movie career, Hudson has helped draw 1.4 million members to the Fabletics platform. Singer-songwriter Demi Lovato has recently become part of the team as a collection partner with the goal of driving additional business to Fabletics. Lovato will also lend her creative input to the company.
Fabletics is expanding its physical retail presence to increase sales and build the Fabletics brand globally. Fabletics operates in 10 countries and recently signed an international distribution partnership to enter the Philippines. Countries such as the Philippines and Vietnam have a young population of female consumers who are attracted to colorful brands such as Fabletics.
Fabletics has also created a fast-fashion supply chain that will result in increased merchandise frequency, with new products dropping weekly in some cases, and new products becoming available across all categories. Supply chain management, logistics and operational efficiency are crucial to the success of Fabletics. Fabletics is competing on price and quality, leaving little room for inefficiency before margins are decimated.
A new VIP Fabletics member can receive two pairs of leggings for $24 through the company's subscription model. A pair of leggings at Lululemon retails for $98 even though the amount of material used to manufacture the garments is the same. A review of prices of similar items on the Lululemon and Fabletics websites revealed Lululemon is more expensive. However, Lululemon has a loyal following willing to pay more for the brand.
Fabletics is facing increased pressure from Nike, Gap, Lululemon and Tory Burch Sport. Kate Hudson, however, isn't phased. Fabletics is not a hobby, Fabletics is her focus. "I work more on Fabletics now than I do on movies," Hudson recently stated.
Hudson is driven to spread Fabletic's body-positive messaging to as many women worldwide as possible. I believe such focus is wise. I have traveled extensively as a consultant supporting retail clients and athleisure has a significant opportunity for growth.
What I envision for Fabletics is growth through expansion, retail and online, and growth through additional product lines outside of athleisure, such as maternity clothing and even expansion into food and nutrition. An idea worth exploring is a partnership with fellow actress and entrepreneur, Jessica Alba, cofounder of The Honest Company. A combined Fabletics and The Honest Company offers unique possibilities for creating an online and retail store experience.
More importantly, I envision Fabletics as a company and platform capable of identifying exceptional women-owned businesses that can scale and be profitable. Royal Hamam, an Australia-based online jewelry and design company owned and operated by Elly Meltzer, is an example of a business with a philosophy and VIP Customer operating model similar to Fabletics. What Royal Hamam, and many other woman-owned businesses don't have, is access to Kate Hudson and the team at Fabletics, and that's a shame. Fabletics can help level the playing field.
I can't predict how large Fabletics can become as a brand. What I can state with certainty is this: Hudson and the executive team from Fabletics have exceptional potential to create something special in retail. Kate Hudson wants to rule the world through her brand and message. I won't be surprised if it happens.
