Smart company: lululemon grows 39% in bad economy

by Bruce Kasanoff on October 14, 2011

The moral of this story might be: clear your mind, stretch your body, and flourish even in a horrible economy. But it’s not.

At lululemon (LULU), customers and employees drive innovation and new products. Think community, and you get the idea.

lululemon sells technical athletic apparel for yoga, running, dancing, and “most other sweaty pursuits.” Based in Vancouver, they now have 151 stores in North America and Australia.

Let’s start with the numbers.

For the thirteen weeks ended July 31, 2011:

- Net revenue increased 39% to $212.3 million.
- Comparable stores sales increased by 20% on a constant dollar basis.
- Direct to consumer revenue increased 93% to $18.6 million, or 8.8% of total Company revenues.
- Gross profit increased 52% to $122.1 million.
- The Company ended the second quarter with $264.7 million in cash and cash equivalents compared to $178.2 million at the end of the second quarter of fiscal 2010.

Yikes. They ought to have a parade.

Christine Day, lululemon’s CEO summed the results up in an understated fashion: “We are confident that we are well positioned to manage successfully through the current economic environment while sensibly pursuing our future opportunities.”

To my eyes, lululemon is selling premium products at premium prices in a bad economy. What’s their secret?

lululemon’s local store in Westport, CT feels like a local store. There’s a giant, professionally-taken photograph of Merri Mueller, who teaches yoga locally. Online, they also link to Merri’s site. The employees know the local instructors. Sometimes you walk by the store and there’s an instructor in the window, doing yoga.

As the firm’s site explains, “Each city with a lululemon location hosts design team meetings. At these meetings, our design team or representatives meet with local yoga instructors, athletes and design-savvy people in our communities to gain their feedback on the function and design of our products.”

lululemon helps customers find the best spin classes. Click to see.

lululemon tries to practice what it preaches. They pay for all employees to attend yoga classes in the community, which not only benefits the employees but also fosters close relationships between employees and local instructors.

In each local community, lululemon works with local athletes and yogis for their feedback on products, and they often hold in-store community classes.

Libby Russell at Communispace wrote a post that raved, “More than any other, this athletic brand continually grabs my attention. After only a short ‘retail relationship’ with them, I can say with confidence that it’s not just their tangible products that have me keeping a close eye on them. Instead, it’s the way I became a valued member of their customer community the second I stepped foot in one of their stores, and visited their website. I wasn’t just a ‘shopper’, I felt like an individual that was going to influence the future success of the brand by simply living the lifestyle they promote and stand for.”

lululemon's site includes advice about how people can focus their intent.

At company headquarters, there is a yoga studio with daily classes. In the summer, “staff are encouraged to hike one of Vancouver’s local mountains before heading into the office or the stores. Staff are also encouraged to jog/bike/walk to work.”

To save space, here’s a link to Ashley’s post about a lululemon SoHo “quick Marathon fashion shopping trip, short test run, and then focus group session.”

lululemon says their goal is to “train our people so well that they could positively influence their families, communities and the people walking into our stores.”

This is one smart company.

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