First, read the summary on Lululemon and watch the linked videos below. Then in your DB entry, share your perspective with the class on the following questions:
What do you see as the key success factors in the market for performance-based yoga and fitness apparel?
What are the primary components of lululemon’s value chain?
What 2–3 top priority issues do CEO Calvin McDonald and lululemon management need to address?
Lululemon Athletica, Inc., in 2020: Is the Recent Growth in Retail Stores, Revenues, and Profitability Sustainable?
In May 2020, shareholders of lululemon athletica—a designer and retailer of high-tech athletic apparel sold under the lululemon athletica and ivivva athletica brand names—were highly pleased with the remarkable turnaround in the company’s performance since January 2016. Calvin McDonald, who became the company’s CEO in August 2018, had proven highly adept in continuing to grow the company and boost its profitability somewhat faster than his predecessor had done during 2016 and 2017. Since the end of fiscal 2016 on January 31, 2016, lululemon’s revenues had almost doubled and net profits were up 243 percent. The number of company-operated stores had increased from 368 stores in 9 countries in February 2016 to 491 stores in 17 countries as of February 2020, and the company’s stock price had risen from $60.75 to an all-time high of $325 in early June 2020. Average annual sales at lululemon’s retail stores open at least 12 months, which had dropped from a record high of $5.83 million per store in 2012 to $4.57 million in 2015 (a 21.6 percent decline), had climbed back to $5.2 million in fiscal 2020, ending February 2, 2020, while online sales rose from $401 million in the fiscal year ending January 31, 2016, to $1.14 billion in the fiscal year ending February 2, 2020.
Going into June 2020, the question lurking for shareholders, given the falloff in retail store sales and customer traffic that most apparel chain retailers were struggling to overcome not only during the peak months of the COVID-19 pandemic but also from the propensity of many buyers to shift their purchases of apparel and other products online, was how much longer lululemon would be able to sustain its recent rates of growth in retail stores, revenues, and profitability.
