Unfortunately lululemon has changed the way they do their webcasts and todays webcast was done very late in the business day (4:30 EST on a Thursday) which is a typical defensive PR move (just think of when celebrities release statements, always right before a weekend if they don't want it to receive traction in the press). Lululemon has always done their webcasts for earnings calls early in the morning PST time (12pm EST). Another change is that it is now only listenable 'live' without the option of pausing or rewinding or listening to the stream later. This means you have to be on the call at 4:30 EST sharp and actively listen to it from start to finish, which mean you will miss a lot of information if you do not have bionic hearing. The call is over now and it is being archived so I am unable to listen to it from where i had to leave off but hopefully we will have the transcript soon.
Lululemon Athletica Inc reported an increase in quarterly earnings on Thursday as sales rose, but its shares fell after it forecast earnings in the current quarter would be at or below consensus. < this is no surprise at all based on my observations and posts over the past few weeks. Price increases, missing fall merchandise, subdued colors etc. etc. etc.
Raising prices should equal more money... well not if you're products aren't worth it any longer. There's no surprise this current quarter is lack luster. Your earnings aren't matching your greed.
ReplyDeleteI was able to listen to it from beginning to end. I know my way around Financial Statements, etc. but I have to admit I didn't understand everything being said. I was interested in hearing what Mr. Potdevin had to say and I had to roll my eyes a few times, especially when he talked about the new website but the only thing he referred to as enhanced was check out with Apple. He said there will be changes coming to the website but he was not specific as to what the changes are. He spoke a lot about the pant wall and how great the Aligns have been for the company and he referred a lot to the new fabric "Nulux". The last half of the year we are going to see more digital prints, new fabrics and a new fleece line. He did make a remark about improving on jackets which I was glad to hear but I don't know when we will see improvements in jackets any time soon. I have said many times that this year has been extremely disappointing for nicely designed and detailed technical lightweight jackets.
ReplyDeleteThe stock plunged 9% after the conference call based on lower projected earnings for this current quarter. If their projections are lower than I have to agree with you Lulumum that the first 3 weeks of new product sales must not be going well although Mr. Potdevin said he was pleased with how the new product was being received. I have to wonder what the new product is going to be like coming our way this Fall/Winter if their expectations for this quarter are falling short or not improving. Very Interesting.
I am looking forward Lulumum to your take on the conference call.
LOL, the Align pants? Which pill if you look at them the wrong way? Ok dude!
DeleteExactly what I was thinking anon 4:09. What a joke!
DeleteHaha thought the same thing!
DeleteCorrect me if I am wrong Lulumum but did Mr. Potdevin say in the conference call that the price increase was well received, or something to that affect? Yet the quarter the price increase takes effect they are projecting same or lower earnings. I think the cluster*xxxx* of mistakes are taking their toll so they are now working on improving their website but with all new designs already made and shipped nothing can help them if they are not well received.
ReplyDeleteWe did see traffic continue to be a headwind in the 2nd qtr., Lulumum what is your take on that comment made by Mr. Potdevin regarding the website?
ReplyDeleteI think it's spin. I think people on web design think the new website is clunky. At the end of the day, they will only know or listen to conversion rates over time. If conversion is consistently better over time (without skewing store inventory to favour Ecom which I believe they have) they will have a reliable indicators of how well the website is doing. As I said though, inventory is skewed to favour sales online so their conversion rates are not realistic.
DeleteThanks Lulumum, the use of the word headwind made me question whether it was good or bad!
DeleteI ave noticed over the past year or so my store doesn't get anywhere near as much of the new stuff in as it used to, and I'm pretty sure I've seen many other people commenting the same thing. That along with 'online only' isn't really making for fair idea, as people are then kind of 'forced' to order stuff they would otherwise buy in store online instead. That being said, I do the majority of my shopping online as it just ins't possible for me to get to a store every week. Now if I do go to store, I'm finding they don't have what I wanted and end up going home and ordering online anyway!!
DeleteHow would a price increase ever be well received? I'd say the first round last year was 'tolerated' and that was more positive than this last price increase.
ReplyDeleteYes, I agree with you, Lulumum. That pretty much sums it up on how I feel about it personally. For example, last year when the Define Jackets went up to $118 I knew that price was pushing it for what the item really is... I used to buy all the new ones that I saw and liked before $118 (when they were $98/$108), after $118, I was only a tad more choosy and just put my blinders on knowing that was too much for what it is, but surprisingly ended up getting most of my Defines in the past year from WMTM! Now that they are $128... well, that is just ridiculous and I refuse to wear my blinders, after taxes where I am it is basically a $150 jacket! That is just too much for what it is. There is no way I will be purchasing anywhere near as many, if any at all for that price, it will have to absolutely knock my socks off and even then I will think twice and probably just wait to see if it makes it to WMTM, where sadly it will be not a deal, but more like what the regular price should be worth. To be honest, I think the jacket priced at $98/$108 at most for regular price is fair enough for what it is.
DeleteAgree LLM, I mean how great are they doing that they have well over 100 items on WMTM. That's been consistently the case for the past several weeks. I think they need to take a serious look at the items they are releasing lately and these ridiculous increases for an inferior product. And hate to rehash but eliminating key core items like the Wild Tank, CRB and original Scuba among many, many other beloved items was not a good move and I highly doubt these changes were 'well received'
DeleteLulumum I am curious to know if price hikes were done worldwide or just in Canada and to a lesser degree in the U.S.?
DeletePerhaps there is successful growth in other countries. If that's the case, it would be interesting to hear where. Where oh where do customers feel most of the lacklustre offerings are worth the price and an easy sell? In general, I really don't buy into any propaganda coming out of these calls.
ReplyDeleteYou cannot:
-cheapen quality/have overall deterioration whether quality of the fabrics OR finishing and assembly of the clothes
-eliminate details that used to make the clothing special (including messing with pockets, for goodness sake)
-have little to no innovation that sets you apart
-have so much repetition of colour
-copy other well known sports brands style/prints (hello how is that unique? Easy fail.)
-have SO MUCH bloody mesh
-mess with and/or discontinue the favourite products (CRB being the latest victim, although the list is endless)
-have so many disjointed offerings in a season
-not release articles on time for a season (looking at you Fall and Winter, late at least two years in a row - aren't we already late with Fall 2016)
-last but not least, continue to increase prices exponentially for overall LESS desirable and LESS worthy products
...then conclude and expect that you are going to get growth. Not everyone is a sucker and/or not everyone has an endless bank account where they can purchase a $70 top or $100+ pant and deem it "disposable". Even wmtm is now a joke.
That's OK. They can continue down this stubborn path led by Potdevin & Co. I'm not confident they are going to succeed.
I think the Lulu logo can only carry them so far and if they continue down the road of producing clothing that is unrecognizable as being LLL unless you see the logo then as far as I am concerned it is no longer lulu. For example, I couldn't tell you what athletic brand someone was wearing unless I could see the logo because their styles are not unique or identifiable to me but with lulu I didn't need to see the logo to know it was lulu. Now there are many designs by LLL that if I didn't see the logo I wouldn't know they were LLL so why would I pay the price for something that looks generic?
DeleteI was anxious to see if the recent price hikes affected their bottom line in the short time they were implemented....surprise... now maybe they will get the message loud and clear. I for one have slowed down on whim purchases...I have to really like a print....I also think twice about getting colours that are so close...and I buy very little from wmtm as I feel insulted that prices are same or higher than before price hikes....look at how long things are sitting there....maybe now they will reconsider the price hikes...hmnnn. ..because no matter what..ie quality sheerness etc it comes down to dollars...if item is reasonable in price people will buy it. They could have reduced costs by getting rid of shoppers and maybe minimal shipping charge but they chose to hike prices by 20 percent on some items...seriously $128 for a pair of tights...old Navy or gap can put our similar quality at less than half the price...lol .....they are making a fortune on those...
ReplyDeleteI love this blog. Everyone is saying all the things I am thinking, and with such detail that I can tell they've been with Lulu as long as I have. Thanks especially to Anonymous 6:35 pm for the thoughtful, spot-on points. Nice to know I am not alone in my assessment of Lulu's changes - particularly for price & declining quality.
ReplyDeleteThey sure are being awfully sneaky about things aren't they? Changing the call time and the listen in process... All signs point to things not going well, go figure, most of us saw this coming....
ReplyDeleteOf course. What is interesting is in the questions they where asked directly about their stated trend of decrease traffic in May and they acknowledged that in fact traffic had decreased and continued to decrease throughout the quarter and will continue into 2017. What offset the traffic decrease was that they had 'favourable product assortment' and 'higher margins'.
DeleteLots of really great pointed questions here but they also cut those short and only allowed 5 where as usually they have time for a lot more comments than that. The spent a lot longer speaking.
Does anyone else watch elevatelululemon? Chip has responded to Q2 earnings.
ReplyDeletedo tell, please! what was his reaction??
DeleteTo the comment above mine: no, what is elevatelululemon?
ReplyDeleteThey are a totally changed company, no doubt! As of today, they have not posted my negative review on the heathered bali breeze swiftly l/s. If you read the last five to seven reviews on the swiftly l/s, you will know that everyone feels the same was as I do because they are comparing the old with the new cheapened swiftly. If they are going to charge a lot, I expect a lot in return which is why I sent back the last two swiftly l/s. I am searching high & wide on e-Bay for Lululemon items that I am missing. At least I know what I am getting with the old stuff.
I wrote the review two weeks ago and so far Lululemon has not posted it, and I don't think they will.
Deleteelevatelululemon.com was created by Chip Wilson, out of frustration, earlier this year after his request to speak for ten minutes at their shareholder meeting was denied. Their shareholder meeting was held virtually which I hear, is unheard of. The information that the website contained was basically an excellent presentation that he had prepared to present at that meeting complete with charts, graphs, and clear explanations of the concepts he was referring to (this was all presented in the form of an "open letter"). The presentation covered several objectives, valid concerns, and resolutions by comparing and contrasting Lulu to two of their competitors, Nike and Under Armour. Some of these points covered were: creating long term growth, targets and indicators of growth, creating share-holder value, declassifying the board (my personal favorite) and yes, innovation. Examples were given of the innovation at Nike and Under Armour such as cooling properties. The general tone was critcal yet constructive.
DeleteI thoroughly enjoyed reading his presentation and found it educational. I wish I could revisit that information but all I can access presently are his two recent penned open letters from August which are interesting. I value what Chip's insights are over Laurent's:)
It's interesting to see now that all the photos online without the model have disappeared. They only have the photos with the model, like how it used to be.
ReplyDeleteYes, you are right about that! Glad you pointed that out to me! Now they need to work on getting their fabrics back in order like before and some amazing color palettes!
Deletei noticed this too. i'm glad they finally changed it since so many ppl complained about this awful feature. before they shut down heylululemon, i wrote a pretty long (and mostly negative) review of their new website and those floating photos were one of my many points i thought they had to improve/modify. when was the new website launched, i can't remember? it took a few months for them do implement this change, no?
DeleteTheir e-commerce needs so much work. The app is hard to browse so I have to rely on the search function more. I tried searching for "mauve" this morning and nothing mauve came up, even though there are mauve items for sale on the website. Great.
ReplyDeletetheir search function is so bad, even on the website! you can't search for colour or material, only product name. a regular, non-lulu addict customer, will have the hardest time searching since they have no clue what products are named. brutal!
DeleteI was bored this summer and so took the time to read their 10Q statement. There were 9 or 10 pages of issues identified as business risks, some of which were surprising (and have been discussed on this blog before).
ReplyDeleteOne of the risks identified was "activist shareholders". I guess they were referring to Chip.
Overall, the company seems to have lost its footing. I am going to sit things out and cherry pick the exceptional new releases and wait for more realistic markdowns.
'activist shareholders' - Bwahaha!
Delete