Lululemon 2013 Annual Report Download - page 6

Table of Contents
2012 to $1.6 billion in fiscal 2013 , representing a 16% increase, including the impact of the 53rd week of sales in fiscal 2012. During fiscal
2013 , our comparable store sales growth was 2% and our total comparable sales, which includes comparable store sales and direct to consumer,
was 7% , both excluding the impact of the 53rd week of sales in fiscal 2012, and we reported income from operations of $391.4 million . During
fiscal 2012 , our comparable store sales growth was 16% , excluding the 53rd week of sales, and we reported income from operations of $376.4
million . In fiscal 2013 , our corporate-owned stores opened at least one year, averaged sales of $1,894 per square foot, compared to sales per
square foot of $2,058 for fiscal 2012 . We believe this is among the best in the apparel retail sector.
Our fiscal year ends on the Sunday closest to January 31 of the following year, typically resulting in a 52 week year, but occasionally
giving rise to an additional week, resulting in a 53 week year. Fiscal 2012, which ended on February 3, 2013, was a 53 week year. Fiscal 2013,
which ended on February 2, 2014, is a 52 week year.
Our Market
Our primary target customer is a sophisticated and educated woman who understands the importance of an active, healthy lifestyle. She is
increasingly tasked with the dual responsibilities of career and family and is constantly challenged to balance her work, life and health. We
believe she pursues exercise to achieve physical fitness and inner peace.
As women have continued to embrace a variety of fitness and athletic activities, including yoga, we believe other athletic apparel
companies are not effectively addressing their unique style, fit and performance needs. We believe we have been able to help address this void in
the marketplace by incorporating style along with comfort and functionality into our products through our vertical retail strategy. Although we
were founded to address the unique needs of women, we are also successfully designing products for men and athletic female youth who also
appreciate the technical rigor and premium quality of our products. We also believe longer-term growth in athletic participation will be
reinforced as the aging Baby Boomer generation focuses more on longevity. In addition, we believe consumer purchase decisions are driven by
both an actual need for functional products and a desire to create a particular lifestyle perception. As such, we believe the credibility and
authenticity of our brand expands our potential market beyond just athletes to those who desire to lead an active, healthy, and balanced life.
Our Competitive Strengths
We believe the following strengths differentiate us from our competitors and are important to our success:
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•
Premium Active Brand.
lululemon athletica stands for leading a healthy, balanced and fun life. We believe customers associate the
lululemon athletica brand with high quality premium athletic apparel that incorporates technically advanced fabrics, innovative
functional features and style. We believe our focus on women differentiates us and positions lululemon athletica to address a void in
the growing market for women's athletic apparel. While our brand has its roots in yoga, our products are increasingly being designed
and used for other athletic and casual lifestyle pursuits, such as running and general fitness. We work with local athletes and fitness
practitioners to enhance our brand awareness and broaden our product appeal.
•
Distinctive Retail Experience.
We locate our stores in street locations, lifestyle centers and malls that position lululemon athletica
stores to be an integral part of their communities. We coach our store sales associates, whom we refer to as "educators," to develop a
personal connection with each guest. Our educators receive significant in-house training at the start of their employment and are well
prepared to explain the technical and innovative design aspects of each product.
•
Innovative Design Process.
We offer high-quality premium apparel that is designed for performance, comfort, functionality and
style. We attribute our ability to develop superior products to a number of factors, including:
• our feedback-based design process through which our design and product development team proactively and frequently seeks
input from our guests and local fitness practitioners;
• close collaboration with our third-party suppliers to formulate innovative and technically advanced fabrics and innovative
functional features for our products; and
• although we typically bring products from design to market in eight to ten months, our vertical retail strategy enables us to
bring select products to market in as little as two months, thereby allowing us to respond quickly to customer feedback,
changing market conditions and apparel trends.
• Community-Based Marketing Approach. We differentiate lululemon athletica through an innovative, community-based approach to
building brand awareness and customer loyalty. We use a multi-
faceted grassroots marketing strategy that includes social media, local
ambassadors, hosting community events and creating in-store community boards. We believe this grassroots approach allows us to
successfully increase brand awareness and broaden our appeal while reinforcing our premium brand image.