Fabletics Sets Sights on $1 Billion Revenue Mark by 2027

written by a member of the WCB

In a bold move that's set to reshape the activewear landscape, Fabletics has unveiled an ambitious strategy to hit the $1 billion revenue milestone within the next two years. The 12-year-old brand, known for its trendy athletic apparel and innovative membership model, is embarking on a multi-faceted expansion plan that spans new markets, product lines, and retail channels.

Ashley Kechter, who joined Fabletics as global brand president in June 2023, is spearheading this aggressive growth strategy. "I'm very confident we'll hit $1 billion [in annual revenue] in the next two years, based on our growth rates and expanded international [business]," Kechter stated at NRF's annual conference, Retail's Big Show.

Key Elements of Fabletics' Growth Strategy:

1. Wholesale Channel Expansion:
   For the first time in its history, Fabletics is entering the wholesale market. The brand has secured partnerships with major retailers including Nordstrom, Von Maur in the Midwest, and international players like Germany's KaDeWe, the UK's Next, and Zalando. This move aims to introduce Fabletics to a broader customer base and drive membership growth.

2. International Market Penetration:
   Fabletics is set to expand into seven new countries, starting with Mexico in April 2025. The brand will open standalone stores through shopping center operator Liverpool. Plans for Central America and the Middle East, including a store in Dubai Mall, are also in the pipeline. The company is adopting a capital-light approach by partnering with skilled distribution partners in these new markets.

3. Retail Footprint Growth:
   With over 100 brand stores already in operation, Fabletics plans to open at least 20 new U.S. stores annually. The company sees significant potential in this area, with Kechter suggesting they "could easily be at 250 stores." Notably, same-store sales comps are up 20% year-over-year, indicating strong performance in the retail channel.

4. Product Line Expansion:
   Fabletics is building out its Lifewear product category, particularly focusing on expanding its tops assortment to compete more effectively with rivals offering a broader range.

5. Membership Model Enhancement:
   The brand's membership program, which boasts 2.4 million members in the U.S., remains a key differentiator. For $59.95 per month, members receive a "member credit" redeemable for products worth at least $100, along with various other perks.

6. Diversification of Customer Base:
   While Fabletics' core demographic for women is 18-35, the brand caters to a diverse customer base, offering sizes from XXS to 4X. The men's category, launched three years ago, already accounts for 30% of the business and is expected to grow to 45%.

7. E-commerce Innovation:
   Fabletics is leveraging innovative tactics on its e-commerce platform, including influencer-driven product videos and social-proof marketing, to drive engagement and sales.

Financial Outlook and Challenges:

Fabletics is approaching $900 million in annual sales, with double-digit comp growth in both retail and e-commerce channels. The company has proactively addressed potential challenges, such as reducing its reliance on Chinese manufacturing in anticipation of possible tariffs.

However, Fabletics faces competition in a crowded activewear market and must navigate potential challenges like the uncertain future of TikTok, a key platform for the brand's marketing efforts.

As Fabletics embarks on this ambitious journey, the activewear industry watches closely. With its innovative membership model, expanding product lines, and aggressive multi-channel growth strategy, Fabletics is positioning itself as a formidable player in the global athleisure market. The next two years will be crucial in determining whether the brand can successfully transition from a successful startup to a billion-dollar powerhouse in the competitive world of fashion and fitness apparel.