There is a company in the US stock market. Since its listing in 2007, its operating income has maintained steady growth every year, and its performance in the secondary market has been even more amazing. From 2009 to the present, the stock price has risen from a low of 2.17 US dollars to a recent high of 324 US dollars. US dollars, over 11 years, the average annual return was as high as 36%.

This big bull stock on Nasdaq is lululemon, a company that started out as a yoga wear company. It also experienced some difficult times during this period, but ultimately proved its competitive advantage with strong performance growth. .

This time the value research team will take you to see how this company has grown from a small company with a market value of several hundred million US dollars to an industry giant with a market value of US$40 billion.

Source | Research and Value Youdao

Text | Editor by Research and Value Group TAO | Arti

This article is for information exchange only and does not constitute any trading advice< /p>

Lululemon was founded in Vancouver, Canada in 1998 by marketing genius Dennis J. Wilson. The company started with women's yoga pants. At first, it was just a design studio, doing design during the day and running a yoga studio at night.

In November 2000, lululemon opened its first physical store in Vancouver;

At the beginning of 2001, it began selling yoga clothing;

Entered in 2003 US market;

Listed on NASDAQ in 2007;

Operating revenue in 2019 reached US$3.979 billion.

The company started with women’s clothing. Women’s clothing has always been the core of the business, accounting for more than 70%. The men’s clothing business has grown rapidly. In fiscal 2019, men’s clothing revenue was US$930 million, accounting for 23.5%, a year-on-year increase of 34.4%. The company’s products Also included are a small number of accessories such as bags, headwear, scarves, socks, etc.

In addition, the company has been experimenting with product category innovation, launching a series of new personal care products in fiscal 2019 and testing the footwear product market.

Lululmon started from the yoga segment and avoided competition with industry giants. The most important thing is that the company's products have both technological attributes and fashion, and its excellent quality makes it very popular. Strong competitiveness.

Take Lululemon's Align series of yoga pants as an example. They are made of Nulu fabric that is sweat-wicking, dry, and stretchable on all sides, and is added with Lycra spandex that has good ductility and is not easily deformed. The fabric feels naked and skin-friendly without being tight. At the same time, hidden pockets are designed on the waist, and the narrow-waisted version designed for Asian body types is used to visually lengthen the legs and achieve a shaping effect.

In terms of technological attributes, exclusive fabrics and advanced technology can meet consumers' various needs for sports performance. In terms of fabrics, the company cooperates with leading fabric suppliers to develop proprietary fabrics, including Everlux, which focuses on quick drying, and Nulu and Nulux, which focus on softness. In addition, the company cooperates with testing companies to test properties such as fabric abrasion resistance and color fastness. In terms of technology and design, the technology used by Lululemon includes ergonomic design, seamless technology, anti-odor technology, etc. Many of these advanced technologies enjoy patent rights and build technical barriers.

In terms of fashion attributes, unlike traditional sportswear brands, Lululemon pays close attention to the aesthetic details of its products while focusing on functionality. For example, for yoga pants, the company used jacquard design to change the single-color problem of sports pants and incorporated various colors and patterns into it, making it suitable for use in more than just gyms. Many girls who do not practice yoga have also noticed this brand. For example, in the bag category, the company hopes that it will become something that women want to take from the gym to the office, rather than just a traditional gym bag that focuses on functionality but ignores aesthetics.

The company's industry belongs to the global sportswear industry. This industry has been dominated by two superpowers for the past 20 years. The operating income of Nike and Adidas far exceeds that of their peers. In 2019, Nike's revenue was US$39.1 billion. , Adidas revenue was US$26.4 billion. After other companies reach a certain scale, they will face fierce competition from the two giants in the industry.

Since lululemon went public in 2007, there has been no year-on-year decline in revenue, and operating revenue has grown steadily. In 2019, revenue reached US$3.979 billion, with a compound annual growth rate of 24.9%.

In terms of net profit, the company's net profit was only US$31 million in 2007, and reached US$646 million in 2019, with a compound annual growth rate of 28.8%

The company's operating income maintained growth from 2007 to 2019

< p> The sales market is also constantly expanding. Lululemon started in Canada and started its main business in China. In 2003, it entered the U.S. market. Related businesses expanded rapidly, and its revenue exceeded Canada in 2011. Since then, the company's largest source of revenue has been the United States. , in 2019, the revenue in the United States was US$2.85 billion, accounting for 71.73%, and the revenue in Canada was US$650 million, accounting for 16.31%. In recent years, the company has paid more attention to overseas markets, especially the Asia-Pacific and European markets, and its revenue proportion has continued to increase.

In 2011, the revenue in the United States exceeded that in Canada

Lululemon can achieve excellent operating results in the fierce market competition. In addition to the company's focus on segmented fields, its products include both technology and fashion. In addition, it has a lot to do with the company's special marketing model.

According to traditional marketing strategies, companies should follow the step-by-step process of "creating awareness - establishing reputation - cultivating loyalty". Both Nike and Adidas adopt this strategy, but Lululemon does the opposite. First, find a group of people to cultivate initial loyalty. On this basis, use celebrities to amplify the brand's popularity. Then, form the brand's reputation through word-of-mouth communication among ordinary consumers. Finally, rely on community marketing to drive "customer equity" to purchase products and realize them.

In terms of community cultivation, the company accurately locates potential consumers in the surrounding area through image ambassadors scattered around the world. Different from the traditional marketing methods of advertising and inviting celebrity endorsements in the clothing industry, the company has more than a thousand image ambassadors around the world, including global ambassadors and community ambassadors. Most of these image ambassadors are athletes, yogis, trainers, musicians, etc. Their inspiring lifestyles and small-scale appeal bring a large number of potential consumers to the company.

In terms of community marketing, in the early stages of brand penetration into target areas, Lululemon often opened experiential display stores (show rooms) dedicated to communicating with customers, carrying out various activities, providing yoga courses and selling themed products. .

For example, before opening its first community store in China in 2016, the company had already opened three show rooms in Shanghai and Beijing. This steady approach allows Lululemon to already have a good customer base before entering the market.

When the local demand signal is strong enough, the company invests in growing into a fully mature store, and builds community operations with the store as the core: brand ambassadors at all levels and store teams work together to bring online sales through store activities. Online social networks are connected with offline store activities to establish a community-based marketing model. They modify some movements in yoga, fitness, running, dance and other sports to create group activities suitable for people to participate, and then promote the activities around stores or communities to attract potential customer groups that match the brand's tone.

Sportswear is the best track in the entire apparel industry. Compared with other sub-industries, this sub-industry has faster growth and higher market concentration. Therefore, companies with large market capitalization are prone to appear in this industry.

Sports is one of the eternal themes of mankind. Health, strength, and beauty are all people’s common pursuits. In the future, with the continuous development of social economy, people will pay more attention to exercise to prevent diseases and aging and maintain a healthy body. Human consumption power and consumer demand will continue to increase, especially in emerging markets. In the future, the penetration rate of sports will increase rapidly and the growth rate will be faster. Bring strong momentum to the entire industry.

Currently, global giants have emerged in the sportswear industry. Nike and Adidas already have strong competitive advantages in all aspects, including strong brand power, complete product lines, global market channels and supply chains. , this kind of comprehensive strength and competitiveness in all aspects is enough to make it difficult for latecomers to surpass. If latecomers want to continue to grow, they need to find new ways to create new consumer brands. After experiencing rapid growth, Under Armor eventually stagnated under the fierce competition from the two giants. Although it also had the problem of low operating efficiency due to its own excessive pursuit of speed.

Lululemon is able to maintain stable growth in revenue and return to a stage of high profit growth after the company experienced a continuous downturn from 2013 to 2017, and the company is able to rely on different growth paths in unique segments. Rapid development has a lot to do with it. The company chose the women's yoga wear market segment, focusing on professionalism and fashion. Starting from cultivating a community of waist leaders, it gradually created a community marketing model and forged a unique competitive advantage.

The company is currently in a growth stage and needs to be continuously improved in all aspects. While strengthening brand building, emphasizing functionality, it is also necessary to attach elements such as trends, emotions and life attitudes to the brand; while improving In terms of product categories, we will continue to strengthen the promotion of men's products and continue to try new product lines, including other sportswear, sports shoes, personal care, etc.; in terms of developing market channels, while stabilizing the North American market, we will continue to strengthen our continuous investment in overseas markets. , continue to maintain the development of online e-commerce business. The company still has a long way to go in the future, which of course means there is still a lot of room for growth.

If you want to grow with this company and enjoy the benefits brought by a high-quality enterprise, the difficulty lies in realizing that although this company often encounters crises, its unique competitive advantages allow its scale to grow steadily. , once we get out of the crisis and straighten out the business rhythm, there will be a period of performance realization.