Yahoo Finance's Julie Hyman and Brian Sozzi discuss Lululemon's new footwear brand, Blissful.

Video Transcript

JULIE HYMAN: Well, Lululemon is getting to a new area after buying Mirror, which Brian Sozzi has shared his thoughts with us on in the past. Now it's going to be shoes. And I know you also have thoughts on these Lululemon shoes. Please share them with us.

BRIAN SOZZI: Yeah, they're very simple thoughts here, Julie. First, let me report the news here because that's what we do. The first time Lululemon is getting into the business of feet, or more specifically, footwear, with a new shoe coming out March 22 called Blissfeel. One word, no space, no hyphen between Blissfeel. $148 shoe focused specifically for women.

It comes in 10 colors. It's made out of special foam. And there you have it, Julie. That's basically what Lululemon is doing here. They did tease at an event in New York City yesterday a line of men's shoes coming next year. But their whole pitch here, Julie, is making shoes specifically for the feet of females because as the industry--

JULIE HYMAN: [LAUGHING]

BRIAN SOZZI: Wow, that's-- that's just really-- there's a little Lululemon bag, one of those eco-friendly bags that they give out for free for now, but I'm sure it's baked into their price points. Nonetheless, yeah, I don't even know where to go after that. But it's just fascinating here, Julie, because the long running dirty secret in the sneaker industry is that shoes are made for the feet of men. So you have Lululemon come out here making shoes, and you see them there on the screen, making shoes specifically designed for women feet.

My take here is very simple. And maybe it's rather unsurprising. So what? There's a lot of other companies. Now why bother? More specifically, why bother, Lululemon? Are they just going to be a niche player in the footwear market? Look at these names already in here, Julie. Allbirds, Nike, Under Armour, On Running--

JULIE HYMAN: No, no, no.

BRIAN SOZZI: --Crocs--

JULIE HYMAN: But here's the thing.

BRIAN SOZZI: --Adidas. Come on, hit me.

JULIE HYMAN: My theory is, they're not aiming at any of those, right? First of all, as you well know, Lululemon has a rabid customer base, a very loyal customer base that will buy stuff from them again and again and again. Maybe they're not buying the Mirror, but they do buy new product launches, right? And it's not any of those big names that you mentioned they're aiming at.

My theory is they're aiming at a company called APL, which is a niche footwear player, relatively high end, that has been big on social media for the last three to five years. And it stands for Athletic Propulsion Labs. And this is, again, a shoe that people get very enthusiastic about. To me, that's what Lululemon is going after. It's not a Nike or Under Armour of the world. It's sort of a more bougie, for lack of a better term.

And originally, those APL shoes back in the early 2010s were banned by the NBA, apparently, because they gave you too much of a lift, I read somewhere. Anyway, I don't know. I think that's what they're going for.

BRIAN SOZZI: I knew you were coming armed with a contrarian take, Julie, so I will follow on all that. From a pure business perspective here, making shoes is a lower margin business. Got to give a shout-out first to a friend of the show, Simeon Siegel, who covers Lululemon, analyst over at BMO, saying, quote, via an email to me, "Footwear is a tough business to get right in a lower margin business if you do." So that's one well-known analyst on the Street.

Next up is Stephanie Wissink over at Jefferies saying she's concerned about Lululemon getting into this business. Why? Like what Simeon said, lower margin opportunity, and then secondarily, focus could be diverted away from Lululemon's core apparel business, which makes it a ton of money, as they try to come out here and take down Nike in some way or another. At the end of the day, Julie, I think the shoes are ugly. But again, they're not made for my feet, not until next year.

JULIE HYMAN: Well, ugly-- shoes being ugly never stopped them being popular if you look at the-- and, you know, obviously, it's in the eye of the beholder, but there are a lot of ugly popular shoes out there. So I don't think that's--

BRIAN SOZZI: Stitch Fix can use these. Stitch Fix-- put these shoes on Stitch Fix. Maybe they'll make a quarter.