U.S. markets closed
  • S&P Futures

    4,076.00
    -14.00 (-0.34%)
     
  • Dow Futures

    34,071.00
    -85.00 (-0.25%)
     
  • Nasdaq Futures

    12,087.50
    -64.50 (-0.53%)
     
  • Russell 2000 Futures

    1,934.00
    -5.40 (-0.28%)
     
  • Crude Oil

    78.98
    +0.11 (+0.14%)
     
  • Gold

    1,941.00
    -4.30 (-0.22%)
     
  • Silver

    23.74
    -0.10 (-0.40%)
     
  • EUR/USD

    1.0859
    -0.0007 (-0.07%)
     
  • 10-Yr Bond

    3.5290
    -0.0220 (-0.62%)
     
  • Vix

    19.40
    -0.54 (-2.71%)
     
  • GBP/USD

    1.2308
    -0.0008 (-0.07%)
     
  • USD/JPY

    130.0390
    -0.0290 (-0.02%)
     
  • BTC-USD

    23,107.95
    +228.53 (+1.00%)
     
  • CMC Crypto 200

    524.33
    +5.54 (+1.07%)
     
  • FTSE 100

    7,771.70
    -13.17 (-0.17%)
     
  • Nikkei 225

    27,376.22
    +49.11 (+0.18%)
     

Lululemon CEO says the company is in the ‘early innings’ of growth

Yahoo Finance’s Alexis Christoforous and Calvin McDonald, Lululemon CEO, discuss the company’s Global Wellbeing Report and the state of the athleisure industry.

Video Transcript

ALEXIS CHRISTOFOROUS: Lululemon is one of the few retailers actually winning during the pandemic, as many of us shift to more casual clothing and a healthier lifestyle. In its ongoing commitment to health and wellness, Lululemon just released its first ever global wellness index. And here to dig into those results is Lululemon CEO Calvin McDonald.

Calvin, it's great to have you on the show. I had a chance to work my way through this index. Lots of great stuff to get to. But first of all, why did you decide to do this? Why did you commission this report? And what do you hope to do with the findings?

CALVIN MCDONALD: Absolutely, and morning, Alexis. Great to be here. I mean, Lululemon is a purposeful driven brand. And the notion of well-being has always been core to who we are and the impact that we want to have on the community. We use the internal term of "sweat life," which is the notion of living a balanced life of physical fitness, mental wellbeing, and human connection through your community. And that has been the initiatives that we've driven.

And we really wanted to institute the well-being index as a means to understand coming out of 2020 and the challenges that so many of us have faced what the sentiment was across the communities in which we are serving, how well did they feel. And we feel a responsibility to be a driver of change. And we felt that getting the information and sharing that broadly, both internally as well as with others, is a good way to spark and start the conversation, as we collectively all look to help those in the community just feel better and more well.

ALEXIS CHRISTOFOROUS: You know, one of the big takeaways for me was that just 15% of workers say their employers are supporting their wellbeing during the pandemic. There's a lot of room for improvement there. How can businesses do better?

CALVIN MCDONALD: They definitely play a big part. I think for me, one of the first validations is the fact that when we think of well-being, we need to think of it across a continuum. There are multiple factors that have individuals feel well. Physical fitness is definitely important, as well as mental and social wellbeing. And I think as an employer, there are a number of ways in which they can focus on all three of those initiatives and the role that they play to help support their employees.

First being physical, the internal programs and promotion of physical fitness, access to fitness. On the mental well-being, understand the drivers of stress, the importance of restoration and recovery, and the role that they can play to really promote their employees putting themselves first and their own health first to lead others more effectively.

And the fact that people living a more purposeful, driven life, having real goals for themselves, as well as sort of that personal development, these are all what we uncovered as key drivers that help and promote people feeling mentally more fit. And then social-- the strength of a community, the strength of belonging, and employers play a big part of that, of ensuring safety as well as connection inside and outside in the community.

So I think employers can absolutely play a big part and must as they think about their employees, their well-being. And we all know that as we as individuals feel more well, we can serve the community better, and we can serve-- our work functions more effectively. So I think it just really unlocks a real big opportunity for all of us to think about the importance that people play inside our culture and what we can do to help promote that.

ALEXIS CHRISTOFOROUS: You know, I was also a little surprised to find that younger people had the lowest overall well-being. 92% of Gen Z-ers said they face barriers to well-being. Were you surprised by that number?

CALVIN MCDONALD: I mean, probably initially, yes. And then when you sort of unpack it and compare to other demographics, I think it's more obvious and makes a lot more sense. And a couple of factors for that is, we all learn how to equip ourselves with being more well through life. We accumulate through experiences ways in which we can deal with stress, ways in which we can find balance, tools that work for us as individuals.

So I think as you collect those through your life experiences, you are more equipped to tackle. And the Gen Z's, being younger, have faced less of those opportunities to gain the skills. And equally, COVID has impacted a lot of what is core to their being and how they define themselves socially, how it's been cut off, and where they are in their own personal development, as well as a lot of the social issues that have come up through 2020 have really struck this generation significantly.

And they just don't have access to the tools that they need to, to allow them to really deal with the stresses that they face. And I think that's one of the interesting learnings through this. And again, what we can do to support them, get through, and feel more wealth is an important initiative for all of us.

ALEXIS CHRISTOFOROUS: And I know that this is going to be an annual thing, your wellness index. And so we look forward to speaking about this with you in the years to come. I want to pivot for a moment, though, and talk about the business. I know that you're going to be releasing earnings in a few weeks.

So to the extent that you can share with us, at a time when a lot of retailers are going bankrupt during this pandemic, Lululemon has been thriving. What were holiday sales like? And do you expect this level of momentum to continue, now that we have the vaccine rollout? And sooner or later, we'll be on the other side of the pandemic.

CALVIN MCDONALD: Yeah, and we-- obviously, our quarter three results are out, and we are very pleased with the momentum that continued to gain across all of our regions, especially driven by digital. But as stores reopened and we continued to operate through some of the operating constraints that we were faced with, overall, the business showed great momentum. And that continued into Q4. We provided some guidance. And we shared coming out of holiday that we are guiding to the top end of the guidance that we had previously provided.

So there is very healthy momentum in the business. We're excited about 2021. We know that we're not through the COVID sort of trading cycle yet. We know that there continues to be constraints put on our business physically, on our store teams, and on our guests and communities. But we're well-positioned. As a brand that services overall well-being, we are well positioned through the versatility and function of our apparel and digitally and our omni investments that we've made and how guests can interact with us, how they can purchase and connect to the brand.

So we're well-positioned. Looking forward to getting through post-COVID. But know that we still have months to trade. And there's good momentum in the business. And we're excited what lies ahead. We're early innings in our growth across all markets, as well as in the categories we're in. So as we've shared with our five-year growth plan, it's very exciting in the growth ahead that Lululemon has as a brand.

ALEXIS CHRISTOFOROUS: I know also last quarter, something exciting happened. You started selling the mirror, that fitness device that Lululemon bought for $500 million during the pandemic. They're in a handful of stores right now. And I remember you saying late last year that you thought the mirror could be profitable this year. Is that still in the cards?

CALVIN MCDONALD: We haven't shared-- when we initially purchased Mirror, and as you've said, for $500 million, at that point, we guided to $150 million revenue number on the year, up from $100 million, which had been previously communicated. Since then, we've provided sort of commentary that we are going to come in, in excess to that number.

We're very pleased with the holiday period. We've been selling it in 18 stores. We've introduced it to our Lululemon community of guests. And we've continued to invest in the Mirror business, as they've grown both from a content perspective, as well as exposure to the hardware. So we're really excited about the momentum in the business. We're just getting started with the synergies of bringing the two brands together and building that community that we know will be just even stronger moving forward.

And we haven't provided any guidance on profitability. This is an area in which we're excited about the momentum. We continue to make the right investment decisions that are going to fuel the growth that we see as opportunity behind it. And we'll make those decisions and share more as we go forward. But it was a very, very positive holiday. And we're excited about the future with Mirror and Lululemon together.

ALEXIS CHRISTOFOROUS: And speaking of growth areas, I know you're also looking to break into the footwear industry. Are you-- is that timeline still on track to launch something in the next 12 months or so?

CALVIN MCDONALD: Still on track. Our plan is to be selling early '22 with a late '21 introduction to the market, where we'll introduce the product. They'll get to see it. And then global selling in spring of '22.

ALEXIS CHRISTOFOROUS: Looking forward to that, I must say. And I know you have more than 500 stores worldwide. Brick and mortar has been super challenging, for obvious reasons, during the pandemic. Are you rethinking the retail footprint at all?

CALVIN MCDONALD: We are, like so many aspects of our growth, early stages. We're fortunate that we have a relatively small retail footprint, even in North America, where we've obviously been trading for the longest period of time. There are a number of markets and locations and density that we had in our growth trajectory. So we are at a very early stage with a healthy number of stores, highly productive, small, and service a real connection and role in the community beyond just transactional.

So I'm very committed to retail, physical retail, and where we are in our growth journey, looking at more opportunities. In fact, what we're seeing is the ability to get at some opportunities that otherwise might have taken longer for us. And that's both in North America, as well as globally. So still committed to physical footprint in our omni-guest strategy, one of our power of three's.

And we're excited about some of the opportunities that are coming up. And our stores have remained healthy, even during COVID. And they play such a unique role in our brand connection. We're going to continue with and evolve that strategy going forward.

ALEXIS CHRISTOFOROUS: All right, we're going to leave it there. Lots to look forward to, though, for sure. Lululemon CEO Calvin McDonald, thanks so much for your time today.

CALVIN MCDONALD: Thank you.