Confirming Pages

CASE 6

lululemon athletica, Inc.

Arthur A. Thompson
The University of Alabama

I

n early 2012, investor interest in lululemon athletica— a designer and retailer of high-end, yoga-inspired athletic apparel under the lululemon athletica and ivivva athletica brand names—was surging. Over the past 30 months, growing numbers of female shoppers were patronizing the company’s stores to pay premium prices for lululemon-branded items that offered performance, fit, and comfort and were stylish as well. The company’s functional and stylish apparel had taken on
“must have” status among growing numbers of fitnessconscious women. People were flocking to lululemon stores not only because of the fashionable products but also because …show more content…

Avid yoga exercisers were not hesitating to purchase $120 color-coordinated lululemon yoga outfits that felt comfortable and made them look good.
Mall developers and mall operators knew what lululemon was and had begun actively recruiting lululemon to locate stores in their malls.
In December 2005, with 27 company-owned stores, 2 franchised stores, and record sales en route to $85 million annually, Chip Wilson sold 48 percent of his interest in the company’s capital stock to a group

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of private equity investors led by Advent International Corporation, which purchased 38.1 percent of the stock, and Highland Capital Partners, which purchased a 9.6 percent ownership interest. In connection with the transaction, the owners formed lululemon athletica inc. to serve as a holding company for all of the company’s related entities, including the two operating subsidiaries, lululemon canada inc. and lululemon usa inc. Robert Meers, who had 15 years experience at Reebok and was Reebok’s CEO from
1996–1999, joined lululemon as CEO in December
2005. Chip Wilson headed the company’s design team and played a central role in developing the company’s strategy and nurturing the company’s distinctive corporate culture; he was also chairman of the company’s board of directors, a position he had held since founding the company in 1998. Wilson and Meers assembled a management team with a mix of retail,