How Lululemon Makes Money

Lululemon Athletica Inc. (NASDAQ: LULU) is a high-end athleisure brand that makes the bulk of its money by selling its products online through eCommerce means. The chic athletic-wear brand also makes money by selling to wholesalers, such as brick-and-mortar stores in malls, gyms and yoga studios. Finally, Lululemon makes money by doing pop-up events in different locations and by engaging online in a vibrant online fitness community.

Are you thinking about investing in Lululemon stock? Understanding the histories and profit models of the companies that you’re investing in is key to creating a profitable future. Read on to learn more about Lululemon, how the company makes money and what you might expect from the future of the brand. 

How Lululemon Makes Money

Lululemon makes money primarily through sales of its athleisure wear, which is marketed both in-store and online. Some of the steps that Lululemon uses to maintain its growing business include the following strategies. 

Marketing a Lifestyle

By marketing and advertising a lifestyle versus specific products, Lululemon makes money by considering the long-term market and what people will be interested in as far as what its products represent. Lululemon’s model is to promote a healthy and adventurous lifestyle — its products represent this vision. Lululemon has engaged consumers with its online workout videos and a worldwide community of those interested in improving their mental and physical health. Lululemon sells jackets, leggings, tanks and other athletic wear, as well as yoga supplies like mats, socks and balance blocks. However, the focus has always been on the lifestyle it wants to portray (travel, style, fitness and self-care) rather than the products themselves.

eCommerce

Lululemon has over 500 stores worldwide, although some have closed temporarily because of the ongoing effects that the pandemic has had on the retail sphere. Despite those closures, Lululemon was able to open thirty new stores in 2020. 

Along with these brick-and-mortar stores, Lululemon is a major user of eCommerce to represent and sell its brand. In fact, online ordering and ordering through specific mobile apps is an extremely popular way to obtain the products, especially if you’re in a region without a Lululemon store or you prefer to shop online. eCommerce has exploded in recent years and shows no signs of slowing down, especially during the pandemic, when many retail spaces remain closed or open with limited hours. Lululemon’s comprehensive online infrastructure makes its products easily accessible. 

Lululemon Stock Price

While a stock’s or share’s essential value may be higher or lower than its price, the stock price is the highest price a buyer is willing to pay or the lowest a seller is willing to let the stock sell for. This number is not determined by intrinsic value but by market factors, such as consumer activity and expected capital investment return.

Lululemon has seen a burst in stock price in recent years, with an increase in total net revenue growth for fiscal year 2020 of 11%. That same year, Lululemon doubled its eCommerce sales, and since the pandemic, the company has only grown stronger. Stock prices are steady because they’re a reflection of the success of the business. People who are working from home or stuck there because restrictions still want ways to stay active (and to find comfortable loungewear); companies like Lululemon fit that need.

Where to Invest in Lululemon

Now that you understand how Lululemon makes money, you may be interested in purchasing Lululemon stock, which currently trades on the Nasdaq exchange. To start buying and selling shares of Lululemon stock, you’ll first need to open an account with a broker. Opening a brokerage account is the easiest way to begin creating a portfolio of shares and investments.

When you open your brokerage account, you’ll be granted access to an online trading platform that you can use to place orders to buy and sell shares of stock according to your directions. Your broker will execute these orders as you place them, and you’ll see your account’s assets in your brokerage portfolio after the orders close. You can choose from many types of investing accounts as well as dozens of brokers offering unique platform tools and specifications. You may want to consider beginning your search for the right broker using the links below. 

Lululemon Past

Lululemon was founded in Vancouver in 1998. Founder Chip Wilson originally stated that he discovered an unfilled niche to make products for women who are suffering from work-related stress. Women were earning university degrees at an explosive rate and filling corporate positions previously filled by men. This transformation was leading to a new demographic of professionals: the health-conscious working woman who was becoming more aware of her need for self-care outside of the workplace. Thus, Lululemon Athletica was born.

This brand has always kept an active and fit lifestyle in mind, and its products are geared toward women who are passionate about travel and about having functional and stylish athletic wear. Lululemon also now offers its own line of men’s products and has been marketing itself as a dual-gendered brand for several years.

Lululemon Present

Prior to the pandemic, Lululemon would approach brand ambassadors to promote its products by giving free Lululemon athletic wear in exchange for hosting free yoga classes right inside the store. This marketing strategy was largely successful with local audiences, who received exposure to the growing practice of everyday yoga and meditation in a non-judgemental setting. 

During the pandemic, Lululemon’s stock increased 40% in value, which cannot be said for most companies. This pandemic success has been credited to an explosion in the demand for indoor fitness options and comfortable yet stylish leisure wear. As the COVID-19 pandemic closed a majority of gyms and exercise classes, many Americans began turning to online follow-along workouts. Yoga became a popular choice thanks to its multiple skill levels, mental health benefits, wide availability and lack of necessary expensive equipment. Its popularity also boosted demand for Lululemon’s products. 

Lululemon Future

Lululemon has grown into a multibillion-dollar industry over the past 24 years, expanding from one small yoga studio in Vancouver to pop-up and retail shops all over the world. As of 2020, a third of new Lululemon consumers were men, and that percentage is only expected to grow. By opening up to all markets while it was already successful, Lululemon has ensured that it will stay a top reputable brand for years to come. In Q3 of 2021, Lululemon reported that its profits surged 30%, despite the pandemic and the fact that other retail outlets were struggling disproportionately. Its number of stores also had a net increase of 18% over that quarter. 

Lululemon: The C-Suite

C-level executives are major driving forces behind any brand’s success or failure. Let’s take a look at three of Lululemon’s top-level executives who are driving the athleisure giant. 

Glenn MurphyChairman of the Board

• 25 years of experience in the retail industry
• Brand focuses are in health and beauty, food, apparel and books
• CEO of investment firm FIS Holdings

David MussaferLead Director

• Director of Lululemon from 2005 to 2010, returned to the role in 2014
• Chairman and Managing Partner of Advent, managing buyout projects

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