Christine Day, the recently appointed C.E.O. of Lululemon Athletica, exhibits the kind of optimism usually reserved for religious leaders and self-help gurus.

"Even the Great Depression only lasted a certain number of years!" she chirps, by way of justifying the company's expansion plans in the face of a retail climate going more sour by the day.

For those who aren't familiar with the budding specialty retailer from Canada, Lululemon is a purveyor of $90 yoga pants and $60 sports bras. Its stores have "guests" rather than customers and "educators" rather than employees. At the core of the brand's identity is a 31-point manifesto that includes such imperatives and affirmations as "dance, sing, floss, and travel"; " do one thing a day that scares you"; and, somewhat more oddly, "children are the orgasm of life."

In short, this is the type of company that would seem to be on the endangered-species list at a time when consumers are becoming less and less brand-centric and buying purely on price.

Investors appear to agree. The stock is down 60 percent since its high of $58 last October, underperforming peers like J. Crew, American Eagle, Urban Outfitters, or Gap for the period.

But if Lululemon breaks the mold of the fad, overexpanding retailer doomed to Chapter 11 scrap heap, the story behind it may be in some numbers that have been overlooked well into the current retail recession.

Lululemon averaged a stunning 34 percent same-store sales growth in 2007, and as of July, it still boasted an 18 percent comparable store sales gain from a year earlier. When Lululemon announced second-quarter earnings in September, it beat analyst expectations for the period while maintaining its full-year guidance.

Analysts estimate that the retailer, which generated revenues of $275 million in 2007, averages sales per square foot around $1,000—by comparison, Gap's sales per square foot of $376 in 2007, and American Eagle's were $638.

All of that explains why, of the nine analysts covering Lululemon, seven rate the stock as a "strong buy" or "buy," and two rate it as a "hold." Sharon Zackfia, a research analyst at William Blair & Company, explains the poor performance over the past year as a combination of jitters over changes in senior management and the stock experiencing the multiple compression that most retailers already underwent in 2007.

Still, while others are being forced to shutter stores, Lululemon is expanding. It's looking to add 30 to 35 stores per year to its current count of 91, launching an e-commerce site next fall, and quietly moving beyond yoga and into product lines for running, dance, and Pilates.

The hope inside the company is that Lululemon's customers are becoming devoted in a segment that has been chronically ignored.

"The women's athletic market has long been underserved by industry behemoths that have simply offered smaller sizes of men's patterns as their female product," says Zackfia.

While apparel spending overall has been one of the softest areas of consumer spending over the past year, activewear continues to be a bright spot. Zackfia estimates that the women's sports-apparel market in the U.S. is as large as $10 billion.

"Activewear is a category where women continue to spend, especially as there becomes increased acceptability of multiple wearing occasions beyond simply exercising," explains Kelly Tackett, a senior consultant at TNS Retail Forward.

Lululemon is not, by a long shot, the only retailer noticing the opportunity. J. Crew, American Eagle, Victoria's Secret, Gap, T.J. Maxx, J.C. Penney, and Wal-Mart are among the retailers shifting focus to activewear offerings through acquisitions or new product lines.

But analysts such as Howard Tubin, a senior analyst with RBC Capital Markets, see Lululemon as strategically superior to these players due to its premium image and product designs that are fashionable as well as technically sophisticated.

"Lululemon is one of a handful of retail apparel doing well right now," says Tubin. "The brand is unique, the grassroots marketing they do is unique, and the price point is relatively expensive, but people have continued to pay up for it."

Lululemon might remind you of another "lifestyle brand" that became a pillar of yuppie culture after pioneering the $4 latte; perhaps it's no coincidence that Day came to Lululemon after more than 20 years at Starbucks, where she served most recently as president of the Asia Pacific group.

But don't think Lululemon is Starbucks minus the stimulants.

While the Seattle-based coffee giant fashioned a global expansion plan based on turning out ubiquitous, carbon-copy outlets, the cornerstone of Lululemon's strategy is maintaining a local, distinct feel to each store.

Day says that the Lululemon values individualism over uniformity, an ethos which extends to each store's unique "community board" listing local fitness events to every outlet designing its own window displays.

Lululemon has rejected traditional advertising in favor of converting local yoga teachers, dance teachers, and running coaches in advance of a store opening to create buzz in the community. The retailer also hosts free in-store yoga classes and fitness clinics (including "dog yoga," no less) to help build consumer familiarity and loyalty.

Unlike many of its competitors, Lululemon has pursued an all-retail rather than wholesale approach, believing that the in-store experience and employing knowledgeable salespeople was integral to supporting the high price point.

"I learned from Starbucks to be really focused on the core of the brand and to make sure that you protect it at all costs," says Day. "At Starbucks, we kind of moved on to Frappuccinos and Caramel Macchiatos before we really owned latte. So sometimes innovation, while it can drive new customers, also takes you away from your core business."

Day stresses that while Lululemon's growth plans may seem aggressive, the near-term expansion goal is for just 200 stores in the U.S. and 45 in Canada—still small enough that the chain can continue to rely solely on affluent consumers.

Giving some credence to Day's assertions, shares of Lululemon have added 17 percent over the past month—perhaps the beginning of a full recovery, but that's still far from a sure bet.

Howard Tubin worries that in a period of rapid expansion, the retailer's necessarily time- and labor-intensive approach to opening new stores will be difficult to maintain. Lululemon's (appropriately) selective approach to real estate could also lead the retailer to fall behind with openings, putting pressure on current growth forecasts.

And even given Lululemon's promising strategy, analyst Tackett points out that the exodus to value stores is a very real trend even amongst high-income households—and one that could persist and worsen.

"We're increasingly worried that there will be fundamental shift in shoppers' preferences towards value-oriented retailers and brands," says Tackett. "Obviously the hope is that they come back when they have the money, but the concern is that the longer this goes on, the more entrenched the shopping behaviors will become."