Lululemon Expands to China

The Canadian specialty retailer opened a small test boutique in Hong Kong's trendy Soho area to law the groundwork for what the yoga brand sees as a huge growth opportunity. Lululemon began looking to international markets even as they still struggle to find a new chief executive and continue to mend their tarnished image after the Luon debacle in the United States.

It's a daring move under the best of circumstances.

"For a long-term investor, there has to be the potential for international expansion," said Credit Suisse analyst Christian Buss, who just returned from visiting Hong Kong's two showrooms.

Lululemon was founded in 1998 in Vancouver, British Columbia, where it is still headquartered, and operates 226 stores in Canada, the United States, Australia and New Zealand. They plan to open stores in London and Hong Kong, as well as promote its new Ivivva brand, targeted at girls, and draw a larger male customer base with new stores.

Lululemon declined to comment, but back in September CEO Christine Day commented that 2013 is "the most important" year in the company's history, as it takes strides towards tighten quality control, add three new manufacturers, launch stand-alone men's stores by 2016 and strengthen global growth.