Specialist
Former Director at Lululemon Athletica Inc
Agenda
- Trends and developments in the athletic retail apparel sector, including online expansion and outlook
- Competitive positioning, including Lululemon (NASDAQ: LULU), Nike (NYSE: NKE), Athleta and Fabletics
- International expansion efforts, including potential M&A opportunities
- Medium-to-long-term outlook and potential for 2022 price increases
Questions
1.
What 2-3 key trends or developments have you been following in the athletic apparel industry relating to Lululemon?
2.
How would you assess the TAM where Lululemon competes, breaking it out across categories or regions?
3.
Do you have any thoughts on connected fitness with Lululemon’s 2020 acquisition of Mirror?
4.
You’ve discussed this trend of developing a full wardrobe, and it seems Lululemon is trying to move into sportswear, outerwear and even beyond, probably bringing the company into categories where it would compete with more established firms such as Nike. Could you discuss the full assortment of categories the company is trying to play in? Which do you think it should play in? Which is growing faster for it?
5.
Could you outline the competitive landscape? Where does Lululemon fall into the stack and what is its share in the markets you’ve outlined?
6.
How quickly has Lululemon been gaining market share to Nike? Do you expect the company to continue taking share from Nike? What is its competitive edge there?
7.
Do you expect demand to level out given the bump over the pandemic, or could those customers continue? What’s the sustainability of the bump Lululemon received?
8.
How would you assess Lululemon on innovation and product differentiation?
9.
Which of Lululemon’s categories do you think are the next level in innovation? What are peers doing that the company isn’t or vice versa? What might those innovations be?
10.
Are Fabletics and Athleta taking share from Nike or Lululemon?
11.
What are Fabletics and Athleta offering that is taking away market share from Lululemon? What are they doing well?
12.
What do you think about Lululemon’s pricing strategy?
13.
Do you expect pricing to increase in 2022? Lululemon seems to be facing a lot of pricing pressure. How does that factor into its assessment of pricing?
14.
What is your opinion on Lululemon’s 2020 acquisition of Mirror? The company recently revised guidance down by 50%. Why might it be revising its forecast down? Who does it compete with in that market?
15.
Peloton recently stopped working with Lulu on a co-branding relationship, and has entered the apparel market itself. What are your thoughts on the Peloton assortment and the competitive dynamic of its apparel collection vs Lululemon’s?
16.
There’s a lawsuit out stating that Peloton is infringing on some of Lululemon’s patents. Is Peleton doing anything significantly different? Could it win over the customers it gained during that partnership? What position might this Peloton apparel line take in the next 3-5 years next to Lululemon? How serious of a threat is it?
17.
Could you discuss branding and partnerships? I think Lulu recently partnered with the Canadian Olympic team.
18.
How would you characterise Lululemon’s overall channel strategy? You discussed the increase in e commerce. How is the company approaching or performing in e-commerce and how does its channel strategy stack up?
19.
Do you expect some online growth to recede again, given retail closures might have driven the move to online? Could online growth continue or could consumers go back to the source?
20.
Does Lululemon have room for growth in the US? What areas might be underpenetrated where it might open up new stores, and are any areas overconcentrated where the company might consolidate some stores?
21.
hina presents a fairly huge opportunity as the world’s second-largest athletic market, and Lululemon operates just 63 stores there now. How is the company performing in China and what is your outlook in that market?
22.
Is the Chinese competitive set different or the Chinese consumer open to the Lululemon brand? How is the brand accepted in China?
23.
Are you optimistic long term on Lululemon’s ability to capitalise on the opportunity in China?
24.
Lululemon’s expansion into Europe has progressed slowly and perhaps the brand isn’t as known outside North America. Why do you think the company isn’t being so well-received in Europe, considering international growth will be critical for it?
25.
What are the barriers to growing in Europe and how is Lululemon approaching those given it perhaps didn’t succeed so quickly in the initial launch?
26.
Obviously there have been a lot of headwinds and bottlenecks for supply chains across several industries. How has Lululemon’s supply chain been impacted? What is the company doing relatively well or poorly vs peers and what’s the general health of its supply chain?
27.
How have Lululemon’s inventory levels performed relative to2019 and do you expect stock-outs over 2022? Does the company have less inventory on the shelf?
28.
How should we think about Lululemon’s growth and profitability profile over the next few years?
29.
What are the top-of-mind threats to Lululemon’s margins in the short term? How might the company offset some of these?
30.
What are your thoughts on Lululemon’s management team and its ability to execute? Are there any moves you might question?
31.
You called out Alo as an up-and-coming brand. Do you think it would make sense as an acquisition target? Would you highlight any other M&A or obvious targets that would make sense for Lululemon to acquire?
32.
What are your best- and worst-case scenarios for Lululemon over the next 12-18 months?
