Lululemon Athletica

lululemon athletica inc.
Public
Traded as NASDAQ: LULU
Russell 1000 Component
Industry Retail
Founded 1998
Founder Chip Wilson
Headquarters Vancouver, British Columbia, Canada
Number of locations
 404 (as of January 28, 2018)[1]
Area served
 North America, Asia, Europe, Oceania
Key people
  • Glenn Murphy (Chairman)
  • Stuart Haselden
    (COO and CFO)
  • Celeste Burgoyne
    (EVP, Americas)
  • Sun Choe
    (SVP of Merchandising)
Products Athletic apparel
Revenue Increase US$ 2.65 billion (2017)[1]
Increase US$ 456.00 million (2017)[1]
Decrease US$ 258.66 million (2017)[1]
Total assets Increase US$ 2.00 billion (2017)[1]
Total equity Increase US$ 1.60 billion (2017)[1]
Number of employees
 13,400 (January 2018)
Divisions lululemon Athletica
OQOQO
Ivivva Athletica
Website shop.lululemon.com

Lululemon athletica inc. (/ˌluːluːˈlɛmɪn/), styled as lululemon athletica, is a Canadian athletic apparel retailer. Lululemon is a self-described yoga-inspired athletic apparel company for women and men. The company makes a variety of types of athletic wear, including performance shirts, shorts, and pants, as well as lifestyle apparel and yoga accessories. The company was originally based in Canada, but has expanded to selling its products internationally in both store fronts and via their online platform, lululemon.com/shop.lululemon.com. While the brand is known for its stylish and high-quality items, it is often criticized for being "cultish, faddish and overpriced."[2] The brand attempts to adopt a genuine, customer-education focus, but has been questioned as to whether it truly practices what it preaches. Key competitors include Athleta, Nike and Under Armour.

History

The Lululemon Athletica store in Westport, Connecticut
Lululemon Athletica in Promenade

The company was founded in 1998 by Chip Wilson in Vancouver, British Columbia, Canada.[3] Initially, Lululemon was a design studio by day and a yoga studio by night, but eventually turned into a standalone store in November 2000. In 2001, the company began selling yoga wear.[4]

In 2005, Bob Meers was named as CEO. He replaced Chip Wilson at this position.

Christine Day, a former co-president of Starbucks International, became chief executive officer in June 2008. Day announced her departure as CEO in June 2013 after one of the company's core products, black Luon yoga pants, were pulled due to the sheerness and lack of quality of the pants.[5]

In December 2013, founder Chip Wilson announced his resignation as chairman, and that president of TOMS Shoes, Laurent Potdevin, would become CEO.[6]

In February 2014, the firm announced plans to open its first full store in Europe with a flagship shop in Covent Garden, London.[7]

In February 2015, Wilson announced that he had resigned from the board.[8][9][10] Michael Casey, lead director of the board, replaced Wilson.[11]

On February 5, 2018, Laurent Potdevin resigned as CEO and from the company's board.[12] Lululemon cited several incidents of unspecified misconduct as the reasons for Potdevin's departure.[13]

Management

According to a company source, seventy percent of managers are hired internally.[14] Store managers are responsible for their store's layout, color coordination, and community involvement.[14]

Products

Lululemon sells a wide variety of athletic wear ranging from tops, pants, shorts, sweaters, jackets and undergarments in addition to lifestyle items including hair accessories, bags, yoga mats and water bottles. These products are designed to inspire physical activity amongst the consumers.[15] Lululemon develops its products by using various technologies and fabrics in order to enhance its product line and enable its ability to address a more dynamic customer base. The company uses both waterproof technology, in addition to Silverescent (tag) and synthetic and natural blend fabrics in the manufacturing of their products.[16] The waterproof technology resists water from going inside the products, the Silverescent fabrics are for odor protection, and the natural blend fabrics are used for softness and usability.[17] For instance, its luon leggings are made of 82% nylon and 18% spandex.

Marketing

Holistic Guerrilla Marketing Model

It has been argued that lululemon athletica adopts a holistic guerrilla marketing model to dominate its marketing tactics. The use of holistic guerrilla marketing by the company is by linking the wearing of their clothing/products to feeling like part of a larger community.[18] Thus, purchasing their product and supporting their brand becomes a solution to a problem. Consumers' purchases from lululemon become less about the commercial transaction, and more about how the individual feels the purchase contributes to their personal development.[2]

Use of social media

Lululemon uses social media including Facebook, Twitter and Instagram as one of its main methods of marketing the company and its products. Through social media such as Facebook, it holds live discussions with designers from the brand via posts and comments.[19] It also feature photos and advertisements for its ‘products of the day,’ to keep its followers interested and actively thinking about the brand.[19]

Sustainability and Corporate Social Responsibility

Lululemon incorporates sustainability into its business model.[20] The company's corporate social responsibility strategy, "Community Legacy", is built around five elements: community, sourcing and manufacturing, people, efficiency and waste reduction, and green building spaces.[21]

Controversies

False advertising

In November 2007, The New York Times reported that lululemon made false claims about its Vitasea clothing product; the firm had claimed that its Vitasea clothing, made from seaweed, provided "anti-inflammatory, antibacterial, hydrating and detoxifying benefits" but laboratory tests failed to find significant differences in mineral levels between cotton T-shirts and the fabric Vitasea.[22] Lululemon was subsequently forced to remove all health claims from its seaweed-based products marketed in Canada, following a demand from a Canadian oversight agency, the Competition Bureau of Canada.[23] A subsequent report in 2009 suggested that some yoga devotees saw the company's yoga image as an "annoying phony-baloney symbol" with criticism that its "positive messaging" is vague with slogans such as "friends are more important than money."

Product quality issues

There were complaints about lululemon's clothing being poor quality with some items being "too sheer," as well as having holes appear and falling apart after a few uses.[24][25] In December 2010, lululemon recalled some of the store's reusable bags that were made in China from polypropylene, based on reports of high levels of lead and concerns about possible lead poisoning.[26] In March 2013, lululemon was hit by a large recall of its black yoga pants that were unintentionally transparent and "too thin";[27][28] the recall, which amounted to approximately 17% of all women's pants sold in its stores, impacted its financial results.[29] The financial hit on earnings, and damage to the public image of the lululemon brand are credited with lululemon's Chief Product Officer, Sheree Waterson's forced departure.[30]

Controversial statements by founder

Founder Chip Wilson has made numerous controversial statements. In a 2004 interview, Wilson mocked Japanese pronunciation of the name of his company: "I was playing with [the letter] Ls and I came up with Lululemon. It's funny to watch them try to say it."[31] He has also said that his company does not make clothes for plus-size women because it costs too much money.[32] In an effort to explain the cause of excessive pilling in the brands clothing, he blamed some customers for wearing lululemon's clothes improperly or for having body shapes inconsistent with his clothes.[33] During his interview for Bloomberg TV in November 2013, he said, "Frankly some women's bodies just don't actually work for it" and "it's really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it."[33] According to one report, comments such as these led to Wilson's resignation as chairman.[34] The statements were described in Time as "fat shaming" which led to much criticism among feminist blogs. The report suggested that it was company policy to discourage "plus-size customers" as part of its brand strategy since "no customer wants to endure the embarrassment of asking a clerk to go find a bigger size."[35]

In June 2016, Wilson published an open letter to shareholders of lululemon stating that lululemon has "lost its way" and given up market share to Nike and Under Armour, after he was denied the opportunity to speak at the company's annual meetings.[36][37][38] Since then, Wilson uses the website Elevate lululemon to share his vision for the brand and business.[39][40]

Lululemon murder

In 2011, employee Brittany Norwood murdered colleague Jayna Murray at the Lululemon Athletica store in Bethesda, Maryland.[41] The case received intense media attention and became known as the "Lululemon murder".[41][42][43] This altercation began when Norwood attempted to steal a pair of Lululemon yoga pants. The scene quickly escalated and ultimately ended in the use of five different weapons and Murray receiving 331 different wounds, leading to her death.[44] Murray struggled to survive and was alive through most of the attack.[45]

In August 2012, lululemon filed suit against Calvin Klein and supplier G-III Apparel Group for infringement of three lululemon design patents for yoga pants.[46] The lawsuit was somewhat unusual as it involved a designer seeking to assert Intellectual Property protection in clothing through patent rights. On November 20, 2012, lululemon filed a notice of voluntary dismissal in the Delaware courts based upon a private settlement agreement reached between the parties that dismissed the suit.[47]

References

  1. 1 2 3 4 5 6 "2017 Annual Report". Lululemon Investor Relations. Retrieved 25 September 2018.
  2. 1 2 "LOCO FOR LULU". Canadian Business. 84: 28–32. May 2011 – via ProQuest.
  3. ↑ Rob Walker, July 21, 2009, New York Times, Marketing Pose, Retrieved , "...it’s no surprise that some yoga devotees have zeroed in on it as an annoying phony-baloney symbol. Elaine Lipson, a writer and editor in Boulder, Colo., who ..."
  4. ↑ "Yen for zen; Yoga is to today what aerobics were to the eighties.; But the new gear is a far cry from yesterday's; Jane Fonda sweats". The Globe and Mail. Toronto. 2011-11-29.
  5. ↑ Fred Meier, USA TODAY 7:25 p.m. EDT June 10, 2013 (2013-06-10). "Stunner: Lululemon CEO Christine Day leaving". Usatoday.com. Retrieved 2014-04-13.
  6. ↑ Ogul, David. "Chip Wilson: Lululemon Chairman Resigns; TOMS CEO Taking the Helm". Newsmax. Retrieved 10 December 2013.
  7. ↑ Suzanne Bearne, Drapers. "Lululemon limbers up to open first UK store in Covent Garden." February 20, 2014. February 4, 2015.
  8. ↑ "Power shifts at Lululemon as Chip Wilson seals deal". Globe and Mail. 11 June 2014.
  9. ↑ Michael Calia, February 2, 2015, Wall Street Journal, Lululemon Founder Wilson Quits Board: Resignation Comes About Six Months After Disagreement Was Settled on Yoga-Apparel Maker’s Strategy, Accessed May 6, 2015
  10. ↑ "Lululemon founder Chip Wilson resigns from board".
  11. ↑ Huffington Post, Chip Wilson Leaving Lululemon
  12. ↑ D'Innocenzio, Anne. "Lululemon's CEO resigns over issue of conduct". chicagotribune.com. Retrieved 2018-02-06.
  13. ↑ Thomas, Christina Farr, Lauren Hirsch, Lauren (2018-02-06). "Lululemon CEO left in part because of relationship with female designer at the company". CNBC. Retrieved 2018-07-15.
  14. 1 2 "Lululemon CEO: How to build trust inside your company". CNN Money. Archived from the original on 2012-11-27. Retrieved 2012-10-18.
  15. ↑ Bass, Erin (2010). "Lululemon's commitment to the environment: a tangle of seaweed, suppliers, and social responsibility". Marketing and Management Faculty Proceedings & Presentations: 1–20 – via Google Scholar.
  16. ↑ "Lululemon athletica inc. SWOT analysis". Lululemon athletica inc. SWOT analysis. 1: 1–7. March 2011 – via Business Source Complete.
  17. ↑ "Lululemon athletica inc. SWOT analysis". Lululemon athletica inc. 1: 1–7. March 2011 – via Business Source Complete.
  18. ↑ "LOCO FOR LULU". Canadian Business. 84: 28–32. May 2011 – via ProQuest.
  19. 1 2 Touchette, Ben; Schanski, Megan; Lee, Seung-Eun (2015). "Apparel brands' use of Facebook: an exploratory content analysis of branded entertainment". Journal of Fashion Marketing and Management. 19: 107–119 – via ABI/INFORM Collection.
  20. ↑ "Embedding Sustainability, Vancouver Style | Sustainable Brands". sustainablebrands.com. Retrieved 2018-08-23.
  21. ↑ Bass, Erin (2010). "Lululemon's commitment to the environment: a tangle of seaweed, suppliers, and social responsibility". Marketing and Management Faculty Proceedings & Presentations: 1–20 – via Google Scholar.
  22. ↑ Story, Louise (2007-11-14). "Seaweed Clothing Has None, Tests Show". New York Times. Retrieved 2007-11-14. Lululemon ... says the VitaSea clothing, made from seaweed fiber ... provides anti-inflammatory, antibacterial, hydrating and detoxifying benefits ... There is one problem with its VitaSea claims, however. Some of them may not be true.
  23. ↑ "Lululemon VitaSea Clothing: Competition Bureau Takes Action to Ensure Unsubstantiated Claims Removed from Lululemon Clothing". Government of Canada. Retrieved 2007-11-16.
  24. ↑ Los Angeles Times, It seems that Lululemon, the Vancouver-based company, had to recall some of its yoga pants because they are too sheer. This is not, it turns out, a minor problem., Retrieved , "....adorably named Lululemon that has a problem with see-through yoga pants. Many brands, when stretched just so, are sheer...."
  25. ↑ Michelle Chapman, AP Business Writer, November 1, 2013, USA Today, New quality complaints about Lululemon pants: Just a few months after company pulled yoga wear from shelves, new quality issues arise., Retrieved May 6, 2015, "...New yoga pants ... recent complaints ... still too sheer... pants pilling after a few months of wear — or even just a few uses — and about holes and seams coming apart..."
  26. ↑ Sinnema, Jodie (21 December 2010). "Lululemon issues recall for shopping bags due to lead risk". Edmonton Journal. Retrieved 6 May 2015. People who purchase yoga pants, hoodies or headbands from the more than 100 Lululemon stores in Canada, the U.S. and Australia often save such bags to carry their lunches to work
  27. ↑ 13 February 2015, BBC, 'Yoga pants': Are leggings and other tight trousers indecent? Are yoga pants a threat to public decency? It might seem so after the beloved athletic wear once again made headlines - this time after a lawmaker debating public decency said the pants "should be illegal"., Retrieved May 11, 2015, "...2013 when Lululemon, a large clothes retailer, had to recall many of its leggings ... sheerness ..."
  28. ↑ June 10, 2013, Tiffany Hsu, Los Angeles Times, Lululemon CEO Christine Day to step down after sheer-pants scandal, Retrieved May 6, 2015, "...The so-called Pantsgate scandal, in which Lululemon pulled all of its black yoga bottoms in March after deeming the luon fabric to be too thin,..."
  29. ↑ Isidore, Chris (March 19, 2013). "See-through pants problem causes Lululemon recall". CNN Money. Retrieved April 7, 2013.
  30. ↑ "Lessons Learned from the Lululemon Recall". The National Law Review. Risk and Insurance Management Society, Inc. (RIMS). Retrieved April 10, 2013.
  31. ↑ "Lululemon founder Chip Wilson's 5 most controversial quotes". Financial Post. 2013-12-10. Retrieved 2018-07-15.
  32. ↑ Bhasin, Kim (2013-07-31). "Shunning Plus-Size Shoppers Is Key To Lululemon's Strategy, Insiders Say". The Huffington Post. Retrieved 2014-04-13.
  33. 1 2 "Outrageous Remarks By Lululemon Founder Chip Wilson". Business Insider. 2013-12-10. Retrieved 2014-04-13.
  34. ↑ Eun Kyung Kim (2013-12-10). "Lululemon co-founder steps down in wake of 'women's bodies' remark". TODAY.com. Retrieved 2014-04-13.
  35. ↑ Eliana Dockterman, November 13, 2013, Time magazine, "What Lululemon Could Learn From Abercrombie About Fat Shaming: A co-founder of Lululemon said his yoga pants just aren’t built for 'some women's bodies.' That's just a bad business decision", Retrieved May 6, 2015, "Clearly the feminist arguments against fat shaming are falling on deaf ears at Lululemon ... torrent of criticism hasn't inspired Wilson to change his tune."
  36. ↑ "Lululemon Founder Slams Company, Now That He's Allowed To". BuzzFeed. Retrieved 2016-06-03.
  37. ↑ Mau, Dhani (June 2, 2016). "Lululemon Founder Chip Wilson Created a Whole Website to Criticize the Company". fashionista.com. Fashionista. Retrieved June 3, 2016.
  38. ↑ "Elevate Lululemon". Elevate lululemon. Retrieved 2016-06-03.
  39. ↑ "http://fashionista.com/2016/06/chip-wilson-elevate-lululemon-website". fashionista.com. Retrieved 2017-02-15. External link in |title= (help)
  40. ↑ "Elevate lululemon". elevatelululemon.com. Retrieved 2017-02-15.
  41. 1 2 Morse, Dan (March 12, 2012). "Lululemon marks anniversary of Jayna Murray's death". The Washington Post. Archived from the original on December 3, 2012. Retrieved November 3, 2012.
  42. ↑ Noble, Andrea (2011-10-24). "Selection of jury starts in Rockville". The Washington Times. Retrieved 2012-09-19.
  43. ↑ Morse, Dan (2011-10-23). "Lululemon killing trial begins Monday". The Washington Post. Retrieved 2012-09-19.
  44. ↑ Stashower, Daniel; Stashower, Daniel (2013-11-29). "'The Yoga Store Murder: The Shocking True Account of the Lululemon Athletica Killing' by Dan Morse". The Washington Post. ISSN 0190-8286. Retrieved 2017-03-07.
  45. ↑ http://www.washingtontimes.com, The Washington Times. "Lululemon victim was alive through most of beating". The Washington Times. Retrieved 2018-05-09.
  46. ↑ Weller, Susan Neuberger (September 21, 2012). "S. 3523: Louboutin, Lululemon, and Fashion Design: Finally Getting Some Respect?". The National Law Review. Retrieved January 15, 2013.
  47. ↑ Weller, Susan Neuberger (November 27, 2012). "Lululemon and Calvin Klein Settle Yoga Pants Design Litigation". The National Law Review. Retrieved January 14, 2013.
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