Wednesday, April 2, 2008

Lululemon Packs Its Bags


Lululemon (NASDAQ: LULU, TSX:LLL), the Vancouver-based yoga-wear retailer reported earnings today and announced some surprising news: they're shutting the doors of their Japanese stores. Their first store opened in Japan in 2005 and operated through a joint venture with Japanese apparel company, Descente, Ltd. There are currently 4 stores, which will be shuttered before the end of the second quarter. Lulu CEO Robert Meers has filled us in on the reasons, noting that Japan represents less than 1.5% of revenues, yet "[takes up] a disproportionate amount of management time/attention" to warrant its existence. Lulu management is going to continue on with their strong US expansion, and they're rolling out their e-commerce platform, which they have high hopes for. Lululemon plans on opening 35 stores in the US next year.

Also of note, Lulu's sales more than doubled in the last 14 months due to strong same-store sales and a healthy addition of new stores in North America. Margins inched higher, to 54.1% from 51.4 a year ago.

3 comments:

flood pants said...

I am surprised to hear that lulu is exiting its Japanese operation. Did the firm mention anything about evaluating administrative restructuring options or any other types of 'real options'?

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