Lululemon Athletica Inc. has finalized leases or is in final lease negotiations for 80% of the stores it needs to meet its 2008 goal of opening 35 new stores in North America, according to Bob Meers, the companys CEO. Presenting at the ICR conference for the first time as a public company, Meers, who was formerly the president of the Reebok brand, said the rapidly growing Canadian maker and retailer of yoga-inspired apparel has the potential for 300 stores in North America. It opened 27 stores in the region in 2007, ending the year with 81. The company typically locates its stores in neighborhoods surrounded by yoga studios, gyms and other fitness clubs. The company also has stores in Japan and Australia.
LULU expects to report sales of $255 million to $260 million for 2007.
“We have a significant growth platform ahead of us,” said Meers. “We are very happy with our initial foray into the United States, Japan and Australia, as well as keeping the growth going in Canada.” Meers sees an opportunity for “significant retail expansion” in the U.S. in the coming years.
LULU has decentralized its manufacturing so that no country or manufacturer produces more than 30% of its products. Asia accounts for 75% of manufacturing and the company is represented in Indonesia, Thailand, Cambodia, Vietnam, China and Taiwan. About 15% comes from quick turn / quick replenishment through Canadian and U.S. manufacturing and the 10% balance is sourced in Peru and Israel, with Peru described as “a high-growth opportunity” for the company, both in terms of high-quality manufacturing and duty-free access into the United States and Europe.
New stores must meet pretty stiff requirements, with minimums set at $750 per square foot in the first year on a footprint of 2,750 square feet. Build-out costs and other pre-opening costs total an average of $900,000. LULU looks for payback in 18 months or less.
