JANUARY 16 2017 – 9:29AM
North American workout-wear giant Lululemon is propping up its otherwise unprofitable Australian operations.
Lululemon calls itself a “yoga-inspired, technical athletic apparel company” and has been praised or derided – depending on your point of view – for normalising workout gear as everyday clothes.
Starting as a joint venture in 2004, Lululemon Australia has 5.2 per cent of the $2 billion fitness and athletic clothing store industry in Australia, according to researchers IBISWorld.
Super Retail Group (owner of Rebel Sports) has the dominant share at 30.4 per cent, followed by RCG Corporation (owner of The Athlete’s Foot, with 16.7 per cent), Lorna Jane (12.4 per cent) and Foot Locker at 7.3 per cent.
Australia is Lululemon’s third-biggest market for company-operated stores outside the US and its native Canada, according to accounts lodged in July 2016. At 25 stores, Australia comprised 7.5 per cent of Lululemon’s 335 company-owned stores as at October last year.
But Lululemon Athletica Australia’s accounts show its ultimate parent company pumped $19.73 million into its operations Down Under to build market share.
The accounts show that produced a $6.8 million profit for the 2016 financial year, an improvement on the previous year’s $7.2 million loss.
The accounts, lodged in December for the company’s financial year ended January 31, 2016, showed Lululemon employed people 524 in Australia and increased annual sales by 16 per cent to $98 million.
The company’s profit was “driven by an improvement in the Australian dollar compared to the US dollar, which resulted in an increase in both the cost of goods sold which was more than offset by the introduction of the ultimate parent company’s market support payment which is included in other revenue”.
Lululemon declined to comment but is understood to be committed to its Australian business.
IBISWorld said the Australian fitness and athletic clothing store industry had “benefited from changing attitudes towards activewear, with consumers becoming more comfortable with wearing gym clothing while not exercising”.
“Major players, such as Lorna Jane, RCG Corporation and Lululemon Athletica have all gradually increased their market shares by attracting customers through brand promotion and large store networks,” it said.
We had a strong holiday season in both our store and digital channels.
Lululemon chief executive Laurent Potdevin
“General apparel retailer Country Road launched an activewear range in October 2014. Global fast fashion giant H&M launched a collaboration collection with Alexander Wang in late 2014, creating a fashionable luxury sportswear range that rapidly sold out.”
Founded in Canada in 1998 and now listed in the US, Lululemon recently updated its guidance, thanks to growth in same-store sales, plus strength at its men’s business and online.
“We had a strong holiday season in both our store and digital channels driven by our assortment, operational execution and guest experience,” chief executive Laurent Potdevin said. “We look forward to 2017 as we continue to advance on our long-term goals.”
Source : Sydney Morning Herald