lululemon CEO: Social media usage has a ‘diminishing return’ on well-being

lululemon CEO Calvin McDonald joins Yahoo Finance Live to discuss surveys on wellbeing practices such as social media usage, coping activities, the supply chain, the fitness industry, labor shortages, and the Mirror fitness product.

Video Transcript

ALEXIS CHRISTOPHOROUS: Athleisure retailer Lululemon is out with its second annual Global Wellbeing Report. And here to break it down for us is Lululemon CEO Calvin McDonald. Calvin, welcome back to the show. It's good to have you here again. We spoke last year when you had this inaugural well-being report. And compared to then, it looks like we're starting to feel a little bit better. Where did you see the most improvement?

CALVIN MCDONALD: We did, as you mentioned. And first of all, as a company that supports well-being, we believed in the importance to continue this work of benchmarking the state of well-being across the world to really help inform us and create a healthier future. Last year, the Global Wellbeing Index was at 65, and this year, the score came in at 66, which with a study of this size-- over 10,000 participants over 10 markets-- that is a meaningful improvement.

And with that, though, there are still challenges and opportunities, as I'm sure we all feel to, to feel more well. And the key areas there were-- holistic well-being continues to be a challenge with only 29% of respondents feeling a high degree of well-being. Gen Z continue to face the most challenging well-being scores. And returning to work, interestingly, actually was shown and reported to drive the well-being score up. So some interesting insights in its second year.

ALEXIS CHRISTOPHOROUS: Yeah, I'm glad you brought up that return to the office stat. Because when you first did this report last year, a lot of us were not back in the office. Some of us still aren't back in the office. So it's nice to see that folks are feeling a little bit better about returning. You also took a look at social media and how that's affecting our overall well-being. What did you find there?

CALVIN MCDONALD: Yeah, with social well-being, it's definitely not an either/or scenario, meaning no social media leads to better well-being. But there's definitely a min and max in how much one should engage in social media. And what we found was those that spent an hour and a half or less on social media scored and indicated a higher overall well-being. And interestingly, Gen Z, which scored the lowest, also spent the most on social media, over three hours a day.

So we definitely saw a big connection between the number of hours spent and one's overall well-being. And that's really driven because a big part of social well-being, which is one of the aspects of the holistic well-being index-- we look at it through a physical well-being, mental well-being, and social well-being. Social media helps us feel more connected to family, friends, and loved ones. But there is a diminishing return if you spend too much time, and it can weigh negatively on your overall being.

ALEXIS CHRISTOPHOROUS: Yeah. I think my takeaway there is everything in moderation, right?

CALVIN MCDONALD: [LAUGHS] Yes.

ALEXIS CHRISTOPHOROUS: What are some of the successful coping strategies that you heard people talk about in terms of making them feel better and improving their overall mental health?

CALVIN MCDONALD: Yeah, it's definitely, I think, being second year into the pandemic, one of the things that we saw rise where people reported handling and using more coping skills to improve their overall well-being, which is an encouraging trend. And of those, the top four were spending time outdoor, physical activity. Both of those seem logical. They're hard to prioritize at times. But when they do, they definitely impact one's physical and mental well-being.

And the other coping is connecting with people that you care about daily and taking breaks to relax throughout the day, the notion of take care of yourself to take care of others. So these coping skills, many of them aren't new. It's the discipline of using them. But we're definitely seeing that people are finding ways to incorporate them more into their daily activities, which is helping to impact their overall well-being.

ALEXIS CHRISTOPHOROUS: And before we move into the business and business conditions at Lululemon, I just want to ask-- this contribution that you're making, the company is making to well-being in the global supply chain, can you just briefly fill us in on that?

CALVIN MCDONALD: For sure. As I mentioned, we're committed to advancing well-being not just with our own employees, but with our guests and our collective community, be it our partners on the manufacturing side or in the communities in which we serve and do business. And we're very proud to have announced the Center for Social Impact in October of this past year. And the center's focus is really on to provide access to mental well-being tools to over 10 million people by 2025. As well, we pledged $75 million to help contribute and support well-being across our global communities.

And some of the key areas where we've already deployed and working with a number of our partners are with the United Nations Resilience Fund for Women, Women Win, as well as CARE, Made By Women, great organizations focused on mental well-being and something that we're committed and will continue to invest and support.

ALEXIS CHRISTOPHOROUS: Fantastic. Good luck with all of that. I want to talk a little bit now about those business conditions because I know, Calvin, last month, you warned that Q4 results would come in at the low end of guidance because of some of the constraints brought on by the omicron variant. So I'm wondering, one month later, what are you seeing? Are there any improvements there on the labor front, on the COVID front?

CALVIN MCDONALD: Yeah. As you mentioned, we indicated with the omicron rise that we saw across many of our markets, which led to operational constraints, which led to anxiety with guests shopping through some of the most important highest-volume weeks of the year through the holiday, we definitely saw that impact as a result of the updated guidance. At the same time, we indicated that it really was a short window of impact.

And then post that, we saw an increase in traffic, a return to that pre-omicron impact. And we're continuing to see that as we move out of '21 into '22. Operational constraints in a lot of our markets, in particular in Canada, are softening, and some guests' confidence in coming back and shopping is returning. So similar trends to what we shared. And on a labor shortage market, we're also seeing our numbers within our own store teams dropping and able to return to more stable operational with access to our educators.

ALEXIS CHRISTOPHOROUS: That's definitely encouraging news there. And just part of your overall commitment to well-being-- you bought Mirror, that fitness startup, for $500 million a couple of years ago. I know since then, you've had to cut the brand's sales outlook. But I'm wondering if you're going to be doubling down on that space. Do you see more acquisitions like that in the future? And dare I ask, would you be interested in Peloton at all?

CALVIN MCDONALD: We're not going to comment on any speculation on other businesses that are in the marketplace. What I will do is talk about Mirror and the fact that the acquisition of Mirror was to strengthen our retention and loyalty with our guests. What we've learned through our membership pilots pre the Mirror acquisition is that there is a strong connection and relationship we have with our guests and demand to offer sweat options, both digitally and physically. And we know the more they sweat, the more they spend. And that drives loyalty.

So it was very much through that thesis that we were excited about the acquisition. And it's been about a year and a half. We've seen significant growth and growth in the membership base, which is having the impact. So we're excited about building this community. We're excited about sharing the vision of Mirror as well as our new five-year growth plan in the coming months at our analyst day. As you know, we reached our five-year growth plan two years early at the end of 2021. So we're very excited about that, excited about sharing the next five years of our growth story. And Mirror and the notion of driving community connection plays a part in that, and we're excited to share that.

ALEXIS CHRISTOPHOROUS: Well, certainly, as the CEO of a company that does own Mirror, you're watching this drama unfold with Peloton. There's news that one of your competitors, Nike, is looking closely at buying it. Is there an opportunity there, perhaps, for Mirror? I mean, they just let go of thousands of employees. Is that even an opportunity to perhaps bring some of those folks on with a background in fitness hardware to something like Mirror?

CALVIN MCDONALD: We're growing mirror. We're growing the guest and membership features. We're excited with the size of our membership base at the end of '21 with only owning the business for a year and a half. And we're continuing to invest in that membership experience. And that investment opens up the opportunity for people, for new roles. And we're always out looking for talent. We'll continue to do that.

And the benefit is Mirror fits within the Lululemon ecosystem, plays an important part, but it's a part of a growth story. And we can take the time we need to grow it to build the community, build a meaningful community that's engaged with the brand of Lululemon and the opportunity that we have across our activities. And that's what we're really focused on as we drive the overall business. And Mirror will play a part in that. But we definitely are taking a long-term view of building that community. And talent always is a big part of our growth story. It's how we grow. It's how we deploy. And we're always out looking for great Talent

ALEXIS CHRISTOPHOROUS: Well, it's nice to have the time to grow that community and to grow that talent. All right. Lululemon CEO Calvin McDonald, always a pleasure. Thanks for stopping by.