Tuesday, June 9, 2015

2015 Q1 Conference Call Highlights

Today was the conference call for the end of the first fiscal quarter in 2015. Here are the more interesting highlights. I won't go too much into the financial stuff since all I really care about is the product.

They did well this quarter, though - 6% growth and a 31% increase in e-commerce. A sharp analyst asked whether the uptick in e-commerce was due to weather (the northeast got hammered with snow this winter) and the website having a better product selection than the stores due to the port issues. The CFO said those two points were indeed factors and Potdevin also pointed out in the Q&A that the store backroom app (where eds use their ipod thingies to order for you from the warehouse) also fed into this number.

  • The second half of the year should see a return to normal as to inventory and product flow (i.e., the ports issue backup will have dissipated by then).
  • First quarter ended with elevated inventory - that means nice markdown racks and WMTM for us. They are planning an on-line warehouse sale in Q2 of the leftover holiday merch but I hope there is more.
  • They are gong to re-launch the Pants Wall in Q3. I assume the Inspires being moved to on-line only is part of this. One of my eds was surprised to hear the Pace Rival is slotted to replace the Inspires. She said the Inspires are a best seller. On a tangential topic, she was asking what people thought of the replacement of the 105F with the What the Sport since people are asking for the 105F and the WTS are just filling the tank wall. The 105F/What the Sport is another SRB/CRB situation. I hope the 105F makes a comeback. People like the favorites for a reason.
  • RE: the tank line - they are introducing higher support constructions, more diverse coverage options [Yay!], and a wider selection of fits. Halle-freaking-lujah! The thing that really hooked me into lululemon was their great tank selection and to see it decimated over the past few years killed me. The tank wall is set to be re-launched in the first half of 2016.  I have to say I am optimistic given the new tanks that have shown up so far - the Amala, Wrap It Up, Inspiration Tank, Ace Tank, Scoop Back Tank, and Straight Up tanks - to name a few. Granted, a lot of the new tanks are on the short side so they have to fix that but I love the return of tanks made of full weight luon and other technical fabrics, more complex designs, and with a diversity of styling. 
  • They are re-designing the website and phase 1 will occur before the end of the year. It's supposed to have better product story telling and targeted product recommendations so I assume it's going to become more sophisticated like the Lucy or Athleta sites.
  • In the Q&A, an analyst asked about the men's line and whether there will be more standalone men's stores and Potdevin's response was amusing: "...the one format we're most excited about right now is the expanded store where both men's and women's are co-located as our female guests shops a lot for him. I mean he does - our male guest does have a lot more permission [lol, is this a translation misspeak?] to come into the lululemon collective, but she still shops a lot for him. So the expanded format - the co-located format is the one that we're seeing tremendous results with." I've written before that my husband has no problem shopping at lululemon since there are often lots of nice looking women in tight stretchy clothes shopping and working there. I honestly think it's a pain in the ass to have two different stores if we're both out shopping together. It's not like the guy's stuff is jammed in a dark back corner and they have to wade through aisles of bras and panties to find it, it's always been right up front with the ladies. The dressing rooms are all together in the back in most stores but I can't see that being a deterrent to most men.
  • Tara Posley (the Chief Product Officer), when asked about swim, seemed to indicate they've heard our response to the cheekiness of the bottoms and lack of coverage on the tops: "We have more opportunity to add additional coverage...offerings in swim, so we've had some good learning in the spring...we could see more upside and opportunity as we move into designing next year for 2016."
  • Potdevin closed his remarks by saying they have shifted from playing defense to playing offense, to which I say, Game On! Let's see what you've got, we've been waiting.


Anonymous said...

I'm really excited about the Om Tank. I hope the US gets it next week. I love the looser style tanks and have had two 105's in my cart for a week (the straps tend to be on the long side for me thus the hesitation). I'll prob try the new Om instead. Can't wait to see more pics and hear fit reviews. I wonder if it will be a size down like the 105. Any idea what the fabric is?

Totally agree re the what the sport. Who wants a loose tank that's slim around the middle. Yuck.

I'm also glad they are finally releasing a running crop with big thigh pockets! I just hope the new pace rivals don't have too much mesh to swallow. Enough mesh already - uggg!

Anonymous said...

While I don't need support and hate tanks with a built in bra for myself (minus Power Y's) I really would like to see more looser tanks that still give shape. As much as I love my CRB's they get too hot to run in during the summer and many times I really don't feel like I want to "suck it in" the whole day or the whole run so all my bumps and lumps don't stand out. That's where the 105F singlet was super perfect. Sized down one size it fit well and was body shaping without being so body hugging and I didn't have to "suck it in".

"we've had some good learning in the spring..." I guess it takes them awhile to "learn" something. No one has liked their swimwear for 3 years now and it's always been the same reasons. Cheeky bottoms, no padding in tops and lack of coverage overall on the poorly designed swimwear. I guess better late than never though right? Lol!

I feel I've bought so much less and have pretty much stopped buying totally as the current designs don't fit me or I don't like (like the What The Sport Singlet, Pace Rival skirt for example) and literally almost every core item in my closet that I'd buy a lot of is now discontinued - pacesetter skirt, 105 singlet, 2-way speeds (new 4-way material is so super thin - I won't be buying anymore speeds), 2-way run times and now the demise of Inspires (thankfully I have plenty) from the stores. Toss is total misses like the cross-crotch pant they made (can't remember the name) and that new dress that's a disaster and i'm actually ready to move on, enjoy the Lulu I have and not buy anymore except the good older stuff off ebay, tradesy or the boards. I guess it's a good place to be. :)

LuluAddict said...

@ anon 6:40 am - the Go Om tank is burnout material. I really like the looks of it, too. The Pace Rivals have the same kind of technical mesh that has been typically used in the running crops - so not the more 'naughty' style mesh in the urban &Go type stuff.

LuluAddict said...

@ anon 7:36 am - Totally agree about the looser fitting tanks and the 105F. I think it's another CRB-size mistake to get rid of that tank. In a similar vein, I hope the No Limit makes a return to the tank wall. Posley is still kind of new and I think the focus has been on fixing pants and tanks so I'm hoping the 2016 swim line will have more diverse offerings but I'm not holding my breath since we've been repeatedly disappointed for years now. Though, I think after tanks the next focus really needs to be on jackets since the big offering these days is Miss Misty's out the wazoo. They don't even have to invent anything new, just bring back the Hustle or Downtime. I think Potdevin is all about making money and not doing it by making the product cheaper, like Day did, but by offering more compelling product even if it has to be at a higher price. I don't think he has the same youth focus that Day pushed - the new Straight Up tank and Amala tank don't scream trendy twenty-somethings to me - so I'm hoping we will have swim that is geared towards women who want functional, not resort, swimwear, who are more chesty and don't want their butt cheeks hanging out at the local pool or lake. Athleta swimwear gets mentioned over and over again in this blog and on the facebook boards and I've got to believe lululemon will be aiming their sights on competing with them. If they are smart, they will.

MB. said...

These write ups are one of my favorite posts you do. Thanks, LLA.

Anonymous said...

I actually like the WTS (I know, to each their own :), and think there is room for both. I don't think it's even interchangeable with the 105F (which I also like), as the 105F armholes are SO open. I feel I can wear my WTS outside of the gym where I can't with the 105F. Keep them both!

Anonymous said...

Excellent points, thanks for giving us your thoughts LLA.
Personally, I'm about done with Lulu too, as the poster above said.
I've been extremely patient waiting and waiting and I've collected some nice pieces this past year, no doubt. But, this Summer's offerings are flat out pathetic. The Swim line is and will always be a joke. A bunch of a-cup swim tops??? Really? I'd pay DOUBLE for Athleta's line and it's pretty high quality to boot. Give up already with the Swim line.
Keeping the high-demand items in stock? Another joke. You have people BEGGING for the FTBW line and you are sold out, there are currently no tanks available. Does this make any sense? Defines? You sell out of any new release in a matter of days and yet you can't seem to make new ones. Inspires and CRB's...again, people WANT THESE and you sell out in 20 minutes?
It's just beyond old Lulu. I have a ton of clothes but it's the same BS excuses quarter after quarter, no innovation, nothing edgy.
You are always late to the table and it's time to move on...

Anonymous said...

Did anyone else notice that the U.S. WMTM is down to 19 items? I bet they pulled stuff for the warehouse sale.

LuluAddict said...

@MB - Thanks! I've been a bit inconsistent in writing them up but now we can start to see results of where Potdevin's team is going design/product wise so it's more interesting to tie what they are saying to what we see in the stores/on the website. This one had some interesting info about an upcoming on line warehouse sale and how the port issue will lead to fat markdown racks, WMTM, and outlets for a little longer.

@ anon 9:17 am - you are right. The tanks are very different fit and stylistically so it seems there could be room for both.

LuluAddict said...

@ anon 1:42 pm - that would be cool if it were to happen early in Q2. You don't think they're getting ready for a big WMTM dump tomorrow?

Anonymous said...

1:42 here-No my first thought was that they pulled them for the warehouse sale. But I'm down for a big WMTM drop tomorrow!

VK said...

@LLA - How do the outlet sales work? Do we need to be on a mailing list, or is it just a big dump of WMTM? Thanks for all your hard work on the blog!

Anonymous said...

I wish the warehouse sale would happen sooner than later, ie. June, not July. Summer is such a transient time for so many people. Frankly, I'll be frustrated if I miss it!

Unknown said...

And it seems they pulled quite a few 'dead weight' items from the site (several of the older-style skinny grooves, and I've been waiting for the Find Your Zens to hit WMTM and they're gone too). Hopefully the some of the things I've been waiting for will be there soon!

Unknown said...

(Or they'll go to the outlet or warehouse sale and I'll kick myself for not getting them when I had the chance!)
And then I'll probably end up paying more to the eBay gougers and I'll kick myself again...

Unknown said...

LLA, finally catching up on your blog. I see where I missed the part about upgrading the website pics now to more storytelling. I so agree on that. Often, when on other sites, its the "customers also bought this" or "click here for coordinating item pictured" gets me a lot. I really hope they do more FULL outfits like Athleta does rather than just showcasing the one main item they are listing. It really helps to see the entire outfit. Just this week, I had to hunt down a running vest worn by Kendall Jenner in NYC. I just ordered the Nike running vest. Also hope they have more athletic models who are in the clothes showing movement instead of the lovely slim models who just stand there currently in the photos. Just really hard to tell.

Sounds like good stuff and I too am waiting to be wowed. I've stopped buying tanks for awhile as many seemed to not have enough support (for bust or in back for those of us that are fluffy). I'm bummed about the Inspires, but at least those are still attainable online. Oftentimes, with their prints, I just can't stand that poly slick material feel so I've been skipping most of their prints. The only exception is the silver fox hyperstripe with electric coral zipper. That material is perfect! I'll have to watch carefully to see what reports on the material feels like for the inspires, or just chance it by ordering it and then returning it if need be. I like the pace rival as I have a few pairs, but have always preferred the inspires. Something about the fit and how it transforms me.

Thank God they're continuing to do warehouse sales online. After the LA warehouse sale 2 years ago, never again! Plus, we can pretty much anticipate what will show up - all the stuff that didn't sell out in WMTM section.

Lastly, too funny that it was JUST this past spring that doled out lessons on the swimwear. I guess it's due to the fact they have a new head of design, and the team seems to be more alert.

All in all, I can tell customer service is improving at the store level. However, I just wish that the girls, all across the stores, would tone it down with the constant unsolicited educating of the tank/bra/pant wall (yes, I know it goes from light coverage to high), material care, etc., after being told numerous times I'm ok and am there for specific reasons. With their interjections, I find it distracting from my shopping as I now have to entertain their schpeel. Sigh....they need to find a way to engage WITH the customer better rather than just talking AT us for no value added.