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Athleta CEO on future of athleisure as online sales climb during COVID-19

Athleta CEO Mary Beth Laughton joins Yahoo Finance’s Akiko Fujita to discuss the company's $2 million initiative to empower women and girls and how the brand is expanding its business amid COVID-19.

Video Transcript

AKIKO FUJITA: Athleisure has been a rare bright spot for the retail sector during this pandemic, with sweatshirts and yoga pants becoming the new office wear with so many people working from home. While overall apparel sales fell 34% between March and July, we saw sales of athleisure rise. And for Athleta, that boost in sales have meant a 6% growth in their sales in the most recent quarter.

Let's bring in Mary Beth Laughton, she is the CEO of Athleta, and she joins us from San Francisco today. Mary Beth, it's great to have you on today. You're just coming up on your one year anniversary here, and you were just saying that it has really been a whirlwind, especially over the last six months. Walk me through the kind of behavioral changes you have seen in consumers on what they're buying, and where they're buying. How that has shifted over the last six months.

MARY BETH LAUGHTON: Yeah, you know it has been a whirlwind. But I would say, our product has been so relevant for her. As you said, she's working out at home, she's working from home, she's homeschooling her kids.

And what we've seen, our customer really loves product that is comfortable but also really versatile, so that she can wear it on her calls but then also go out, [INAUDIBLE] workout at her own time. So, I think the versatility has been something we've seen and we will continue, as people's lives continue to evolve during this pandemic.

And then, how she's behaving, is I think she wants connection more than ever. She wants to be able to still connect with people like her and other customers and our associates. And so we've been focused on how can we provide her choice and convenience. Whether that's shopping online, which she loves, or coming into one of our stores-- we just opened our 200th store this month.

Or, you know, we've started services like a virtual concierge service, where she can get one on one personal service from the comfort of [INAUDIBLE] on her phone with our store associates. So I think that's something that is really important to customers during this time.

AKIKO FUJITA: Let me get back to that growth story you just pointed to. I mean, the expectation here is that athleisure is here to stay, it's not a trend. And yet, the rate of growth has just been incredible over the last six months. We just pointed to that 6% sales growth you saw in the last quarter. How sustainable are those rates, you think? Inevitably people are going to go back to the office, they're not going to be-- one would presume, be wearing yoga pants when they go back-- how much of the demand during this period you think has already been pulled forward?

MARY BETH LAUGHTON: Things like our wraps are something that's a beautiful product that she can wear comfortably in her home but also could wear into the workplace. So I think people are going to continue to want to wear comfortable, versatile clothes. They've gotten used to it during this time and they're going to want to continue, and I think that's really going to help us continue to see the growth.

AKIKO FUJITA: You pointed to the new stores you're looking to open. We're talking about bricks and mortar stores at a time when a lot of other retailers are doubling down on their online strategy. Where do you ultimately think that the sweet spot is for Athleta? Is it 70% online, 30% in-store? Where do you see that breakdown?

MARY BETH LAUGHTON: Yeah, you know, we are fortunate with Athleta that we have a strong online business, even pre-pandemic. You saw it in our quarter two results, online business was up 74%. And there's no doubt that customers are going to continue to want to shop online. But, you know, we did open eight stores since March. And we-- like I said, just opened our 200th store. So we are really focused on just providing options for our customer.

And I think retailers of the future are going to need to focus on offering options for the customer, wherever where she is spending her time. And sometimes that's online, sometimes that's on a mobile app, sometimes that's in a store, or sometimes it's a combination of both, with the ability to digitally connect store associates with customers at their home. So, I think that's going to be a focus for us just to continue to meet her wherever she is, and offer her a great experience.

AKIKO FUJITA: We've seen athleisure become an increasingly crowded space. One of your biggest competitors, Lululemon, has really been aggressive in expanding its brand-- not just to women, but offering menswear, as well as going into shoes. They recently acquired the fitness startup, Mirror. And yet, Athleta has really doubled down on women, and this message of inclusion you've talked about. Not just for skinny women, you've talked about women of all shapes and color.

What is the market you're trying to address? I mean, why double down there, what is that potential that you see you can still tap into?

MARY BETH LAUGHTON: Yeah. I think for Athleta, you know what we recognize is that it's more important than ever to really focus on our mission and be authentic. And I think customers these days are really valuing brands that lead with their mission and stay committed to who they are. And that's certainly what we're focused on at Athleta. We're all about empowering women and girls, making them feel confident [INAUDIBLE].

In fact, we're just announcing a new Power of She fund that we're launching, a $2 million commitment we're making, to really fuel confidence in women and girls through connection and through sports. So we're really excited to just continue to focus on doubling down on our mission, which is, I think, really important for women and girls at this moment.

AKIKO FUJITA: How do you see that $2 million being distributed? To your point, in this message of empowerment, what are some initiatives that you're looking to, what are some organizations that you think can really go well with the Athleta brand?

MARY BETH LAUGHTON: Yeah, so our plan for this fund is to launch our first set of grants later this fall. But we're partnering with the Women's Sports Foundation, and they're really going to help us narrow in on organizations that do fuel confidence in women and girls. So, that'll be a very clear criteria. And I think what's so great about that is there's so many organizations that really help elevate women and girls in that way. So we'll be focused there in partnership with the Women's Sports Foundation.

AKIKO FUJITA: OK, we'll be watching that initiative very closely. Mary Beth Laughton, the CEO of Athleta, great to have you on today.