Thursday, March 22, 2012

Conference Call Excerpts

Other than lulu made a ton of money this quarter some of the bigger news is that they are opening a showroom in London, a second in Hong Kong (hopefully by the end of May) and are looking at expanding more in Europe - Day specifically mentioned Germany.

Other interesting excerpts:

"So the swim line (broken in this blog two months ago) that we've got coming up later on this quarter is absolutely incredible. It's not only swim but it's also surf components that we added to the line. We're looking at road biking in addition to commuting, which you just saw, spin, bar methods and some cold weather gear that you'll be seeing for Q4 of this coming year. So there's a lot going on. There is no shortage of ideas here at lululemon." [Can you start getting the spring/run stuff out the door already? I've been waiting for run singlets. Thx.]

Q: First, just following up on the Men's business, Christine, I was hoping you could expand a little bit more on who the customer is relative to the Women's customer

[My facetious answer - I'd say a fairly high percentage of the male customers are the women customer's husbands, boyfriends, brothers, fathers, or sons.]

A [Day]: Who's the customer for Men's? We see that customer broadening tremendously. I think we used to hit a slightly younger male, which I would say when I say that it's up to 35-year-old and that's the target who we see driving the brand. But we see that broadening very much across a much larger base to both younger and slightly older men. So it's the same fitness enthusiasts that we see, lululemon people who work on a regular basis, who appreciate the same high functionality when they work out and crossing over into street appeal. And they really appreciate the anti-stink properties of the nylon and the Silverescent that we have versus polyester, which tends to attract and hold smell. So both in functionality and look of the garment is who we're appealing to. And we're really seeing people not be as sensitive to it being a women's brand. They're seeing it as a premium male's choice. So we see 1 guy wear it to the gym, another guy says, "I think I'll get some of that." They get it, they love it and the cycle begins. So we see more men shopping for themselves in our store everyday and coming back repeatedly. And they get a favor to something and we see them buy in bulk, which is a little different behavior than you see from our female customers. So we definitely see that we've got huge adoption rates from the product once they try it. And we see the consumer band growing and expanding



"...we're opening a new IT center to support that in San Francisco because that allows us to gain the talent. What we've noticed already, because the office lease is signed, we're in the hiring process, we have 10 high-qualified applicants rather than 2 that took -- and taking us 6 months to close some of those IT positions. So that's why you're seeing us gain some traction in the spend that we're doing because finally being able to hire the right people to drive our e-Commerce business." [Very interesting. The website has been a clusterf-ck for so long I had always thought they had trouble attracting people to Vancouver. The population of the US is ten times that of Canada. It makes sense to mine the US for help.

15 comments:

M.E.L.R. said...

I've been saving some $ and even some x-mas gift cards for the swim line. I hope I'm not disappointed. I am really looking forward to seeing it!

AZ Lulu Fan said...

I agree with you LLA, the male customers are introduced to Lulu through their WAGs, wives and girlfriends. My husband would never have considered this line for himself. Too expensive, too flashy, too young, and the yoga gal staff makes him uncomfortable. I picked up a Lulu golf polo for him and now he's hooked. Still won't step into a store except to buy gift cards, but he can't wait for the golf shirts to be released every year. He even ordered one online for his brother last year!

Pink Peony 4 said...

The only involvement my husband has is buying stocks. He's afraid if Lulu goes under I will tip over to the other side. He has been happy with the stocks and wished he bought lots more of it. I'll have to tell him to slow down now since it seems like lots of people are getting too unhappy with the scarcity model, etc. I too am tapped out on Lulu. I cannot go to the gym often enough every week to wear what I order once. Also it does not help that I have my favorites. I need to just stick with what I like not what everybody is fighting over. Help me Lord.

Anonymous said...

Germany? Jaaaa, endlich ist es soweit!
I'm in neighbouring Switzerland but I really really hope Germany would do the e-sales for Europe and so saves us, European fans, all the $$ we've got to pay in import taxes, customs and Fedex Int'l with EVERY single order.
Also, since lululemon is not (yet) a known brand in Europe, I wouldn't have to rush to order within 10 min after the upload!

Anonymous said...

I would dearly love to see LULU fix three things this year:

1. Their e-commerce - they have built such a strong brand but their e-commerce is unacceptable as it is

2. Allocation of inventory between the markets--they seem to over-allocate in some markets and under- in others

3. Quality issues as LLA has pointed out

Anonymous said...

I would just like to comment on everyone's eagerness for more spring/summer items to be released. I live in BC and we just got a huge dump of snow today! I realize that there are lulu fan's world wide - and in some places it's spring in March - But in Canada, it's still winter. Lulu will get to summer, by the time summer gets to Lulu (Canada) ;)

Anonymous said...

Interested to see what they come out with for road cycling and how they price it. I would love to see a cute cycling jerseys and I'm already used to paying upwards of 70 for a ss so the lulu prices should be standard lol

Sk lulu said...

I love your commentary on the conference calls :)

Anonymous said...

In Ontario it was 27 degrees the other day, summer heat.

Anonymous said...

Surely Lulu is not just thinking of Canada when they come out with stuff or is it? Maybe the US does not buy enough. Hard to believe but likely I guess. They don't have to send us those thick jacket stuff. Come to think of it, they don't in my area anymore.

LuluAddict said...

Day talked a lot about specializing for different markets. She mentioned bright colors for Florida, as one example. Part of me hopes that as well as IT they might start doing some design in San Fran, too. I think a lot of their line is geared too cold for much of the US. A good example is the Remix Light and Lux. That could easily be a year round product in the US.

@ anon 4:34 pm - Here is what Day had to say about opening showrooms in other markets (she did mention Switzerland!):

"We haven't made any decisions yet whether or not we'd go to any additional showrooms in other countries. But we do definitely have some markets that we're really trending and watching. And Germany is a very attractive market for us; it allows us to have all of the layering properties that we have, like in the Canadian market, the guest is very athletic there. There's a huge yoga community in Germany so that's one of the key markets. And that halo effect of Germany goes into Switzerland and Amsterdam and the North. But what's easier for us to gauge is where we see international shopping from our e-Commerce site, which right now is based out of the U.S. and those sales come into there. And there are -- we watch the markets and top markets that we see e-Commerce sales coming from. And there are tourist stores, where we do see seasonally people come in. We see that, obviously, in our Hawaiian store. We see that at Whistler. We see that in New York City. And we do pay attention. But it's -- we don't have a tracking system, where do we see that. People coming from, but anecdotally, we do know that we're growing demand in Latin America. We're growing demand particularly from France. Huge demand still in Japan, Hong Kong. And we see it spreading across Asia now. We see a lot of tourists in our Hong Kong showrooms that are coming in from all across Southeast Asia and buying in bulk. So we are very excited to get a store -- a showroom and then ultimately a store opened in that market to begin to see where we're generating that demand, and then we follow it with e-Commerce."

Anonymous said...

LLA here Anon @4:34pm

Thank you for posting this additional excerpt.
Maybe it's pure coincidence, but it caught my attention that the European key markets she mentioned (with the exception of Switzerland), are represented in the cycling team lulu is sponsoring: Germany, Holland and Sweden("the North").

I can totally see why Germany and France, as these are larger countries with more sales growth potential. But Holland and Switzerland? California is ten times bigger than Switzerland! Or another comparison: nearly the combined size of RI and VT. And Holland is about the size of Maryland.

Personally, I'd be very surprised if they opened a showroom in Zürich (largest city in the country), albeit extremely pleased. Yoga apparel is not yet popular, not even amongst yoga/pilates instructors. The closest they get is with the Harem pants...

But in general, Swiss women are fashion oriented without following all fashion trends immediately. They occasionally engage in impulse buying, but generally prefer to invest in high quality basics. Like someone mentioned in this blog a couple of days ago: rather buy one classic Burberry trenchcoat in a year, than six seasonal cheaper anoraks.

Switzerland has a small but very competitive apparel market that concentrates on high-end and/or niche products. Rent prices for retail businesses are amongst the most expensive in Europe ($7500 per square metre). But on the positive side, and based on sales revenue per square metre, Zürich equals New York and Hong Kong and boasts the highest purchasing-power worldwide, as well as the highest per capita income along with the world‘s highest quality of life, even
outperforming London and Paris. That according to a retail report of European markets, released a couple of years ago.

Lastly, I'd like to note that the Swiss sport retail sector is understandably mainly focused on winter and outdoor activities, with Mammut, Jack Wolfskin and Patagonia on the lead. So lululemon could easily fill the needs for indoors sports. I believe they could and hope they'll try.

MandyPots said...

Did any of the analysts mention the PP issues/quality control? Or will those issues be reflected in the next quarter?

M.E.L.R. said...

I live in Edmonton and it is pretty much still winter :( but I would still love some Lulu spring/summer stuff! Maybe I just have a problem though...

Anonymous said...

I'm so excited about the showroom turning into a store in Hong Kong! I am moving there in July. :)