Understand the joys and worries of Lululemon's latest financial report in one article→
2024-07-11
Zhiyi Technology
![]()
Lululemon has always been the darling of the fashion and sports circles, and its social media attention remains high, and it has been given a few halos.
lululemon stock price trend
But this one, onlyIt has achieved an astonishing increase of nearly 600% in ten yearsDuring the 2021-2022 epidemic, Nike and Adidas chased after the company, which recorded a revenue growth rate of 40.3% and 28.6% in the United States, why did the stock price situation in 2024 take a sharp turn for the worse, once falling by more than 40%?
Today, we're going to talk about lululemon and use it inPublicly available financial report data from 2018 to 2023to dig deeper into the real market performance of this star company. IncidentallyThinking, will lululemon's future be ruined, or will it be brilliant again?
*The number of words in this book is 5000, the estimated reading time is 15 minutes, and it is recommended to collect ~
The first is revenue and growth.
According to lululemon's new financial report information released in June, global net revenue in the first quarter of 2024 increased by 10% year-on-year to US$2.2 billion, with a net profit of US$312 million and a net profit margin of about 14.2%; Fiscal 2023 global net revenue increased 19% year-over-year to $9.6 billion.
Overall, lululemon's growth trend is still good, but the source of public skepticism isThe 10% increase in the fiscal quarter was not only much smaller than the 22% growth in the same period last year, also down from 13% in the previous quarter, as a resultFiscal 2023 showed a continued slowdown, especially in North America, the largest market。
lululemonCalvin McDonald, CEO
Calvin McDonald, CEO of lululemonon thisDirect representation:
"U.S. stores are experiencing declining footfall and conversion rates since 2024. U.S. consumers are cutting back on clothing and other non-essential spending due to the uncertainty in the macroeconomic environment. ”
The U.S. news website Quartz also made a similar point in a related report, saying:
"Comfort and style may no longer be enough to convince American consumers to deal with stubborn inflation and save money for necessities."
Looking at the long-term cycle, lululemon's year-on-year revenue growth rate from 2018 to 2023 (as shown in the figure below) began to decline after reaching a peak of 42.14% in 2021.The growth rate in 2023 will be less than half that of 2021, only 18.60%.
On the other hand, combined with the net profit margin for the fiscal year, we note:lululemon's net profit margin since 2018 has basically fluctuated around 15%., as shown in the following figure:
If the net profit margin is graded at 15%, 10%, 5% and 0%, generally speaking, 10%-15% belongs to the best level, and 15% belongs to the excellent performance level.lululemon has achieved this metric for 3 years, including 16.15% again in 2023。
Other than thatlululemon's gross profit margin has also remained at a high level of 55% over the yearsIn 2023, lululemon reached a new high of 58.3% (as shown in the chart below), indicating that lululemon has actually strengthened its overall profitability in 2023, especially its cost control capabilities.
![]()
Another metric that has changed significantly in 2023 is "days of inventory turnover", lululemonThe number of days of inventory turnover in 2023 plummeted to 64.97 in 2023 from 120.09 in 2022, indicating that the speed of inventory realization has accelerated, the efficiency of working capital use and inventory management has improved, and the speed of market response has also improved. This is in line with lululemon's general direction of improving survivability to cope with uncertain environments.
Through the above-mentioned net profit margin, gross margin,Inventory turnover days, etcdata, we can basically summarize the general situation of lululemon:Revenue growth is slowing down, and net profit margin and gross margin are risingIt shows that lululemon is ensuring and improving profitability through cost control, product structure and management strategy optimization after growing to a certain size, so as to face fierce market competition and maintain its advantages.
However, the information revealed in the financial report is not enough to support the market value of $64.3 billion (the highest) for a long time, so the latest market value is still fluctuating at $36 billion, and it is still necessary to return to the highest pointlululemon offers real solutions for growth.
![]()
As early as 2019, lululemon was proposed at that time"Five-Year Growth Plan" – Power of Three, which is divided into product innovation, total guest experience and market expansion。
These three directions are also the answers given by lululemon in recent years, trying to find the second level of growth from them.
Next, let's analyze what kind of results this "Power of Three" has brought to lululemon.
Increment 1: China
In lululemon's latest 2023 annual report,The official highlighted the Chinese market,"China's growth rate reached 67.2%, which is twice the growth rate in 2022,China's share of revenue also increased from 7% to 10%”，The growth rate directly leads the world's major markets.
lululemon's revenue in fiscal year 2021~2023 by region
Corresponding to high growth,2023yearlululemonglobeOf the 56 new stores, China accounted for 28whereasAfter entering 2024, the number of stores in China will grow even faster (as shown in the figure below).
![]()
Calvin McDonald revealed,We will continue to look for opportunities in Tier 1 to Tier 3 cities in China。As of now,lululemon has a total of 148 stores in China, mainly distributed in 43 cities across the country, the number of stores in first-tier cities is the largest, followed by "new first-tier" cities,Second- and third-tier stores account for more than 20%。
![]()
Based on the direction of the store, there are two data that are worth paying attention to: the store efficiency and ping efficiency of offline stores.
As of the latest FY2023 data,lululemon's average revenue per store in China exceeded RMB 44 million。
From the perspective of ping effect, lululemon is even more excellent, unlike a clothing company, which has been reported by overseas media:
"In the U.S. retail industry, Lululemon ranks fourth in terms of floor efficiency, behind Apple, (Murphy) gas stations and Tiffany, setting a record for the highest floor efficiency in the apparel retail industry."
It is understood thatlululemon's average ping efficiency in 2019 was $1,657. In 2023 after the epidemic, the ping effect will recover to 1,609 US dollars。
Source: Public financial reports
Under normal circumstances, as long as the ping efficiency continues to rise, lululemon only needs to add new stores in China as planned, and the revenue scale of offline stores will continue to increase, becoming a stable source of revenue, which will also belululemon's brighter incremental source in its 2024 earnings report。
Increment 2: Online channels
From the analysis of channels, lululemon's sales channels mainly include: offline direct stores and online e-commerce.
The latest FY2023 annual report shows thatlululemonOnline e-commerce revenue accounted for 44.82%, compared with 45.86% of offline stores, forming a pattern that goes hand in hand.
Source: Public financial reports
Growth black box data shows that the contribution of e-commerce to lululemon's growth has increased year by year, from 17% in 2011 to 50% in 2022, namelyHalf of the money lululemon makes every year compared to last year is contributed by e-commerce。
According to Zhiyi's "shaking clothes" data,lululemon's official flagship store on Douyin, which opened in January this year, jumped to third place in the sportswear industry in the second quarter, sales increased by 244% month-on-month。 In the sportswear industry, the sales of lululemon's official Douyin flagship store in June also increased by 82.12% compared with May.
Data source: Shake clothes
Combined with the insight of "Douyi", the sales trend of lululemon's official flagship store on Douyin from January to June can be seen from itThe sales composition is mainly driven by live streaming, which reached a new high during the 618 activity cycle.
Data source: Shake clothes
There is also lululemon's Tmall flagship store, which has been operating for a longer time and has a more regular operation, and we can observe the following data overview:
As of June 17, the number of fans of lululemon's Tmall flagship store is 350W, the store's product sales in the past 7 days are 18W, the sales volume is 8800W, and the average price is 481 yuan, or related to the discount of 1299 minus 100 and various vouchers launched by lululemon's Tmall flagship store during the 618 period.
With the help of Zhiyi's "price band analysis", it can be seen thatThe main price band of lululemon's Tmall flagship store from 2024 to date is 1000-1500 yuan, accounting for 27.75%, which is consistent with the price range of lululemon's ace product yoga pants with a unit price of thousands of dollars.
The second price band for sales is 400-500 yuan, which accounts for 25.8% of the total with 500-600 yuan. It is worth noting that, according to the trend chart, the proportion of these two price bands increased during the 618 event, reflecting the online discounts, full reductions and other preferential activities operated by the lululemon Tmall flagship store during this period.
Aligning the range of commodities analyzed to the "Sports/Yoga/Fitness" sector, noticinglululemon's Tmall flagship store has made price adjustments to its products since the beginning of 2024, especially the hot-selling yoga pants, most products have dropped to the range of 400 yuan-500 yuan, and the discount rate of many special products is as high as 5%.
![]()
apparentlylululemon is passingSuch promotional efforts try to further open up the consumer market of yoga equipment in China, although it is contrary to the "original intention" of its founder Wilson:
"The key to selling yoga pants at three times the price of ordinary products is not to discount them."
Increment 3: Men's Wear Business & Accessories
In fact, lululemon tested the waters of the menswear business in 2013, and its representative product is ABC pants. According to information, lululemon opened men's clothing stores in Lower Manhattan in the United States in 2014 and Toronto, Canada, respectively, but they were closed after just a few years.
In 2019, lululemon released a product innovation in the Power of ThreeEmphasizing the "vigorous expansion of the menswear business in winter", it is clear that the menswear product line is a crucial growth point and to double the revenue of menswear.
Three years later, lululemon's net revenue from menswear reached $1.536 billion, or 37% of women's net revenue, not only doubling that goal, but alsoOriginally planned to upgrade to "Power of Three×2In the next five years, the company plans to double its menswear revenue from the previous year, doubling its total revenue target to $12.5 billion.
As a result, we have seen lululemon's recent actions against the men's clothing business:
-
In November 23, the first men's pop-up space in Chinese mainland was opened in Shanghai Hongqiao Tiandi;
-
In January 24, the first independent men's clothing store in the Asia-Pacific region was opened in Beijing;
-
In February '24, lululemon announced the launch of its first men's footwear collection;
-
In March '24, the CEO said he would launch more new menswear products in 2024;
Based on this, the performance of the menswear business in the fourth quarter of fiscal 2023 was remarkable:lululemon's menswear revenue growth surpassed that of womenswear for the first time during the fiscal year。
One of the product innovations of Power of Three is to "continue to expand the women's clothing and accessories business" and expand into more categories, such as the launch of four new categories in March 2022 - footwear series, tennis series, golf series, hiking series, etc.It marks lululemon's comprehensive layout in the women's clothing market in all categories。
When it comes to accessories, lululemon wants toThrough accessories products with lower consumption thresholds, the company can attract more new customers and stimulate more consumption of old customers。 Calvin McDonald highlighted that the global accessories market is worth $110 billion, and lululemon currently has a share of less than 1%.
As a result, lululemon has developed handbag products such as Fast Track, On My Level, and Quilted Grid. With the rise of armpit bags and large bags,There are more than 60,000 keyword notes on "lululemon bag" on Xiaohongshu。 In 2023, the revenue of its accessories product line has reached 13%, and the main product is a bag born in 2018 and priced at dozens of dollars.
According to Zhiyi data, lululemon's luggage items on the Tmall flagship store also have good sales, such as the "Fast Track Women's Sports Bag 2.0", which will have more than 2.5W sales in 2024.The sales volume of a single product exceeded 1700W yuan。
Data source: Zhiyi
Previously, the market hadQuestionedlululemon, mainly focusing on how it should face the situation that the traditional advantageous areas are approaching saturation, and should it choose to stick to the subdivision and core users? Or do you choose to expand your price range and categories to attract new demographics? That's rightlululemon is undoubtedly oneDilemma.
Now it seems that in order to find the next growth point as soon as possible, lululemon hasFrom the once focused on women's yoga clothing, it has developed into today's multi-gender and multi-category.The answer given is already clear.
![]()
It is undeniable that lululemon has brought fire to the entire yoga clothing category, and with it, it has also ushered in more market competitors, the most typical of which are similar positioning products of other brands, as well as various "replacements".
In particular, players in the original sports track, such as Nike and Anta, have followed up after seeing the best-selling yoga functional clothing, which is as follows:
-
Nike released its first yoga series in 2019;
-
In 2021, Li Ning reintegrated the women's sports product line and extended its products to yoga leggings, sports bras and other categories;
-
ANTA ACQUIRED THE YOGA WEAR BRAND MAIA ACTIVE, AND AT THE SAME TIME, MANY OF ITS BRANDS HAVE LAID OUT YOGA PRODUCT LINES;
-
GAP's sports women's clothing brand Athleta launched the yoga pants fabric "Pilayo";
-
Ubras, which specializes in underwear, and Jiaoxia, which focuses on sun-protective clothing, have also launched products such as yoga pants and beautiful backs
lululemon is also very concerned about this, tooIn the 2022 financial report, the brand that has a direct competition with it is specifically mentioned, including Adidas, Nike, PUMA, Under Armour, Columbia, and more.
On the other hand, there are many new power brands at home and abroad that are taking advantage of the trend to cross the river by touching lululemon. For example, VFU, Particle Fever, MAIA ACTIVE, and Lori, which are regarded as "Lululemon's replacement" in China, as well as Alo Yoga, which is popular in North America, and Vuori, which has received investment from SoftBank...
In particular, Alo Yoga's core product yoga pants are mainly priced in the $98 to $138 range, such as the star product high-waisted Goddess series yoga pants priced at $138, and the high-waisted Airlift yoga pants priced at $128, which is directly priced in the same price band as lululemon yoga pants, such as the Align series, which is also priced at $128.
thisIn addition, Alo Yoga also directly threatens lululemon's core customer group - the post-90s and post-00s in Europe and the United States, a group of younger Gen Z consumers with more social discourse. There are even media jokes:
In contrast,lululemon became a brand worn by moms, and younger daughters preferred Alo。
So far, Alo has opened 93 stores in 11 countries around the world, and at the end of October 2023, Reuters reported,Alo's parent company is seeking financing at a $10 billion valuation。
Just as lululemon has brought freshness to consumers of Nike and Adi, these latecomer brands can also provide freshness more than lululemon, an "outdated Internet celebrity".
At the same time, as lululemon's fabric technology has become an open secret, lululemon "replacement" that claims to be the same source of factories has appeared on major e-commerce platforms, such as Pinduoduo and 1688, a large number of "lululemon same style", "lululemon foundry" and other labels of commodity cards, the price is only one-tenth of the genuine product, but the sales volume is tens of thousands.
It is conceivable that when these similar competitors are competing to emerge in yoga wear, and even the entire sportswear track, and relying on their predecessors -lululemon's operational experience, as well as more advanced supply chain costs, distribution channels, and marketing efficiencyOnce the competition is rolled up, lululemon has to face a serious situation, both at home and abroad.
RightFor lululemon, the thriving yoga clothing market is its "success", but the difficult "defending the country" is just about to begin.Current explorations alone may not be enough; The mixed media and the fluctuating stock price may be the same.
