Lululemon 2011 Annual Report Download - page 29

Table of Contents
Operating Segment Overview
lululemon is a designer and retailer of technical athletic apparel operating primarily in North America and Australia. Our yoga-inspired
apparel is primarily marketed under the lululemon athletica and ivivva athletica brand names. We offer a comprehensive line of apparel and
accessories including fitness pants, shorts, tops and jackets designed for athletic pursuits such as yoga, running and general fitness, and dance-
inspired apparel for female youth. As of January 29, 2012, our branded apparel was principally sold through 174 corporate-owned and franchise
stores that are located in Canada, the United States, Australia and New Zealand and via our e-commerce website through our direct to consumer
sales channel. We believe our vertical retail strategy allows us to interact more directly with and gain insights from our customers while
providing us with greater control of our brand. In fiscal 2011, 43% of our net revenue was derived from sales of our products in Canada, 53% of
our net revenue was derived from the sales of our products in the United States and 4% of our net revenue was derived from sales of our
products outside of North America. In fiscal 2010, 52% of our net revenue was derived from sales of our products in Canada, 46% of our net
revenue was derived from the sales of our products in the United States and 2% of our net revenue was derived from sales of our products
outside of North America. In fiscal 2009, 60% of our net revenue was derived from sales of our products in Canada, 40% of our net revenue was
derived from the sales of our products in the United States and an immaterial amount of our net revenue was derived from sales of our products
outside of North America.
Our net revenue increased from $711.7 million in fiscal 2010 to $1,000.8 million in fiscal 2011, representing a 41% increase. Our increase
in net revenue from fiscal 2010 to fiscal 2011 resulted from the net addition of 41 retail locations, including our remaining four reacquired
franchises, and comparable store sales growth of 22% in fiscal 2011. Our ability to open new stores and grow sales in existing stores has been
driven by increasing demand for our technical athletic apparel and a growing recognition of the lululemon athletica brand. We believe our
superior products, strategic store locations, inviting store environment, grassroots marketing approach and distinctive corporate culture are
responsible for our strong financial performance.
We have three reportable segments: corporate-owned stores, direct to consumer and other. We report our segments based on the financial
information we use in managing our businesses. While we receive financial information for each corporate-owned store, we have aggregated all
of the corporate-owned stores into one reportable segment due to the similarities in the economic and other characteristics of these stores. Our
direct to consumer segment accounted for 11% of our net revenue in fiscal 2011, 8% in fiscal 2010 and 4% in fiscal 2009. Our other segment,
consisting of franchise sales, wholesale accounts, sales from company-
operated showrooms, warehouse sales and outlets, each accounted for less
than 10% of our net revenue in each of fiscal 2011, fiscal 2010 and fiscal 2009. We previously reported our franchise channel as an operating
segment; however, we reacquired our remaining four franchised stores in fiscal 2011 and opening new franchise stores is not part of our growth
strategy.
As of January 29, 2012, we sold our products through 174 corporate-owned stores located in Canada, the United States, Australia, and
New Zealand. We plan to increase our net revenue in North America and Australia by opening additional corporate
-owned stores in new and
existing markets. Corporate-
owned stores accounted for 82% of total net revenue in fiscal 2011, 83% of total net revenue in fiscal 2010 and 87%
of total net revenue in fiscal 2009.
As of January 29, 2012, our direct to consumer segment included our e-commerce website. E-
commerce sales are taken directly from retail
customers through www.lululemon.com. Our direct to consumer segment is an increasingly substantial part of our growth strategy, and now
represents more than 10% of our net revenue.
In addition to deriving revenue from sales through our corporate-owned stores and direct to consumer, we also derive other net revenue,
which includes wholesale customers, as well as franchise sales, warehouse sales and sales through a number of company-operated showrooms.
Wholesale customers include select premium yoga studios, health clubs and fitness centers. We reacquired our four remaining franchise stores
during fiscal 2011,
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