Canadian Sports Brand Lululemon Delivers A Better Than Expected Earnings Report

Canadian sports brand lululemon delivered a better than expected earnings report.

In the early morning of March 30, lululemon released its fourth quarter performance report and annual financial report of fiscal year 2021. The data show that: in 2021, the annual revenue will increase by 42.1%, reaching 6.26 billion US dollars, and the profit will rise by 65.6% to 975.3 million US dollars. Among them, the fourth quarter of 2021 achieved revenue of $2.129 billion, a year-on-year increase of 23%; Net profit was 435 million US dollars, up 32% year on year.

After the results were released, the capital market reacted quickly. As of today's press release, lululemon's share price was $376.92 per share, with a market value of 46.25 billion.

This sports brand, which hardly does marketing, never lowers prices, and rarely invites stars to speak for, has become the world's third largest sportswear brand by relying on a pair of yoga pants. In November 2021, lululemon's market value once stood at $60 billion, surpassing Adidas with a market value of $32.9 billion in the same period, and ranked second in the world.

On March 23, lululemon released its first female running shoe, blissfeel, priced at 1180 yuan. Lululemon announced its entry into the men's Yoga market and launched tennis and golf products in e-commerce channels and offline stores at the end of March.

For 24 years, lululemon has walked the world with a pair of yoga pants. Now, it wants to catch more people.

Lululemon can still play

In 2021, revenue was $6.26 billion - lululemon's revenue was much lower than that of Nike (US $44.5 billion) and Adidas (US $23.7 billion), but it was a record high of its own.

With a pair of comfortable yoga pants, lululemon has become a new life belief of a group of urban middle-class women, and has established its own brand barrier. It has three major businesses: online channel DTC (direct to consumers), Direct stores and others (including Orly stores mainly in North America, flash stores, wholesale business for Yoga gyms and gyms, mirror and co branding business), accounting for 44% and 45% of the total revenue respectively.

Lululemon financial year 2021 performance report

The women's clothing business, which accounts for 67% of overall revenue, remains lululemon's core pillar product, with net revenue of $4.2 billion. Men's products have also added more men's iron powder to lululemon - its men's products are up 61% from 2020 to $1.5 billion.

Regionally, the US remains lululemon's largest market, contributing $4.3 billion in net revenue. However, the international market except the United States and Canada showed higher growth potential. In the fourth quarter, the net income of North American market increased by 21%, and the net income of international market increased by 35%. Among them, China is becoming an important market for lululemon.

In 2020, lululemon revealed that its e-commerce penetration rate in China has reached 42% through tmall flagship stores. At present, the number of fans in its tmall store is 2.29 million, basically maintaining the rhythm of self broadcast once every three days. The most popular item in the store is lululemon's classic align yoga pants, which sell more than 4000 pieces a month. Lululemon attaches great importance to e-commerce. First, it aims to enhance the brand exposure, and the second is to enable consumers in the areas not covered by the stores to buy their own products.

In 2019, lululemon put forward three strategies called "power of three", namely, product innovation, customer experience and market expansion. The key goal of this strategy is to quadruple the digital revenue of men's wear and DTC and quadruple the international revenue in the next five years.

In 2019, lululemon's men's wear, digital and international revenues are $700 million, $464 million and $480 million, respectively. By 2021, these three groups of figures will increase to US $1.5 billion, US $2.8 billion and US $1.96 billion, more than 2 times, 6 times and 4 times, all reaching the pre-set targets.

The secret of high customer order and high Repurchase: circle culture and community driving

"If I could only bring one brand of clothes, I would definitely choose lululemon first." On the social platform, one blogger wrote.

Before 2018, you may not have heard of lululemon - this year, it appears more frequently on the social platforms of European and American stars and Chinese bloggers. Moreover, due to the over 140% growth rate of e-commerce business in the Chinese market, it has been widely reported by the media. Nowadays, you may see it in yoga gyms, offices and even pedestrian streets. In a few years, lululemon has become a social signal. The "Ω" logo printed on the back of yoga pants is more like: I have money to spend and time to manage my body.

Compared with the average unit price of 400-500 yuan for Nike and Adidas fitness pants, the price of lululemon 800-1000 yuan yoga pants is on the high side, and its stores never lower the price for promotion and rarely marketing. Some people don't understand its high premium, but there are always a group of consumers flocking to it.

The secret of lululemon to build this magical aura lies in its unique circle culture and community operation mode.

Chip Wilson, its founder, once revealed that lululemon spent only 2% of its revenue on marketing. Different from the marketing method of Nike, Adidas, andrma and other sports brands signing sports stars to sponsor large-scale events, this sports brand has done one thing since its debut: lululemon's stores are not only stores, but also communities for yoga enthusiasts.

Lululemon brings Yoga coaches, fitness experts and consumers into its system. When the company started, lululemon was a design studio during the day and a yoga gym at night. Yoga instructors can become "store ambassadors," meet new friends and potential customers in the store to develop their business, get discounts or free products. In return, they offer free yoga classes on behalf of the brand in the store, and the social circle established by each store ambassador will soon develop a large number of lululemon fans.

Behind each pair of yoga pants, there are hundreds of professional KOLs (key opinion leaders) who grow grass to the maximum extent. This directly stimulated lululemon's sales and led to a high repurchase rate envied by other brands, whose management had revealed that the repurchase rate of core high net worth users was as high as 92%.

The loyal circle formed by the community culture is gradually restoring the vitality of the direct stores affected by the epidemic. The comparable sales of the same store in the old stores are increasing, and the number of new stores is also increasing. In fiscal year 2021, the revenue of global direct stores increased by 70%, accounting for 45% of the total revenue from 38% in 2020.

The recovery of operating efficiency of Direct stores also promoted the increase of gross profit rate of the company. Compared with last year, the gross profit increased by 46% to US $3.6 billion in fiscal year 2021, and the gross profit rate increased by 170 basis points to 57.7%.

The ultimate experience and circle culture constantly persuade more people to make room for lululemon in the wardrobe.

Men's wear, sneakers, gym, lululemon is a little busy

Lululemon, who started with yoga pants, has been trying in recent years to prove that it's not just yoga pants. In 2017, lululemon changed its original brand positioning and defined itself as "a sports brand inspired by a healthy lifestyle".

Since then, lululemon has extended its product scene from yoga to business leisure and other aspects of the new middle-class lifestyle: in April 2019, lululemon launched a personal care product line, including four products: antiperspirants, lipsticks, moisturizers and shampoo free shampoo; In July, the brand's first gym opened in Chicago, including food, clothing, training, work and life; In June 2020, lululemon made the first large-scale acquisition since its establishment, and bought mirror... A US family fitness company for us $500 million, including high luxury sub brands, beauty protection products, fitness glasses, men's products, including the latest women's shoes. Behind the expansion of the product line, lululemon wants to break the impression of "feminine yoga clothes" and tell stories around the lifestyle.

At the beginning of Yoga suit popularity, lululemon created it into a quality lifestyle. Wearing these yoga pants, consumers simultaneously unlock a series of assumptions: as long as I wear lululemon, I can also have a good body and live a fashionable and healthy life that people respect and yearn for.

Now, lululemon wants consumers to feel that they are not just a brand of sports equipment, but a global symbol of a fashionable and healthy lifestyle. When this group of consumers establish a sense of cultural identity, they may think of lululemon for the first time when there is a demand for the relevant category.

Some people have commented that lululemon's real strength lies in its ability to find out exactly what consumers have not yet said. So, among the new categories, can you copy the success of yoga pants?

Will consumers be harvested?

Women's Yoga series are so popular that many consumers are still unfamiliar with lululemon's other products. During the Beijing Winter Olympics, the Canadian team appeared in lululemon. Some people wonder that the brand still has down jacket.

There are mature and stable competitors in any category of cosmetics, shoes and gyms. Lululemon's full category strategy also means an expansion of its competitors - in its financial report, it wrote down its competitors: not only sports brands such as Nike and Adidas, but also casual clothing brands such as gap and Urban Outfitters. Victoria's secret, which has fitness product lines and member gym services, is also included.

After lululemon announced its entry into the category of women's shoes and shoes, lululemon has not only put forward the selling point of providing female guests with a complete set of clothing, accessories and shoes, but also changed its marketing method to the traditional way of Nike ADI: during the warm-up period for the sale of women's running shoes, she invited Zhang Changning, the Olympic champion of women's volleyball team, Colleen Quigley, a famous track and field player Paralympic champion kadeena Cox and other athletes for their own platform, social platform on the new running shoes related notes have more than 10000.

But to get out of the circle, lululemon has to give consumers a reason to choose.

On the one hand, from the price point of view, the top running shoes such as Nike next and soconifer speed 2 can be bought at the same price as this running shoe, and Adidas and andrma also provide more choices for dimension.

On the other hand, lululemon has to compete with other sports brands in terms of brand strength. In the mass market, Nike, Adidas, Arthur and soconi are still in the first echelon. In recent years, on run, allbirds, and lululemon are targeting the same group of people: middle-class men and women, sports loving, and consumer power.

While expanding other categories, lululemon should also take into account the encroachment of new and old competitors on the Yoga apparel market.

After yoga clothes, if consumers want to "pay" for other categories, it depends on whether lululemon's description of the exquisite life of the middle class is solid enough.