lululemon athletica inc. (LULU)

Investor Day 2014

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Apr 17, 2014

Hi, everybody, and thank you very much for taking the trip and coming to join us here in Vancouver. And I'll say beautiful Vancouver even though you can't see it that well today from outside, but this is what it usually looks like. So we're very proud and happy to live here and happy to have you come and join us. I'm just going to take care of housekeeping before I hand it over to John. Just a couple of things. We won't really stop during the program today for BioBreaks and there's juice and coffee at the back of the room. So for Bio Breaks out that door men's and women's when you need to. You don't have to put up your hand or anything. It's a good deal. What other thing, if you need to make a call there's a little sitting area just outside there. If you need to have a longer call or do some business, the room downstairs where you had breakfast is available to you all day. So feel free to go down and use that if you need to. When you came this morning there was a group that came early on buses for yoga and run and most of you I think brought in your luggage. The rest of the groups came on buses number 23. So if you remember what bus you left your luggage on get back on that bus to go to the airport. If you do not remember both buses 23 will go to the airport at the same time. If you're not going to the airport you have to go and find your luggage and take it to wherever you're going. But they'll go at about 1 45 between 145 and 2 they'll leave, which should get you there for I think a lot of people are on that 4 o'clock flight home. If you need to do something else, come and find me, we'll sort it out. But that's it for housekeeping. And with that, I will pass it over to John who will be managing the program for the day. Thanks, Tres. As Tres says, welcome to Vancouver. Thanks for coming. For those who haven't been here before, we're in the Lululemon store support center in Kitsilano. It's a great part of town. It's 2 blocks from the beach, but more importantly, it's about 6 blocks from the original Lululemon store up on Fourth Avenue. So it's a perfect location for us. We moved in here about 3.5 years ago. For those of you who were at our last Analyst Day, I think we'd recently purchased the building after initially moving in as a tenant and we occupied about half the building. It was even quirkier than it is today. And then over time, we've been able to move all of the other tenants out. So at this point, we occupied the entire building and we were able to do a modest renovation. So it does look a little better than it did when you were here 2 years ago. We have advanced amenities like our reception area now. The toilet is flushed. I guess a lot of you got to experience our staff yoga room and change rooms this morning. And you'll get a bit of a tour a little later this morning. So for this morning, you're going to see a series of presentations, starting with Laurent, then a series of people talking about product and the product engine, store and e commerce operations, all the way through to brand. So, Laurent will be first up and just I'm glad that you're finally having an opportunity to meet with Laurent. Over the last 90 days, I get a lot of questions about what's Laurent like. From my point of view, all I can say is he's been great. He came in. 1st day, he gave me a gift. He gave me this really cool coffee mug. And I just thought, wow, this guy is going to be fabulous. So I hope you like him as much as we do. And with that, I want to turn it over to our new CEO, Laurent Potevin. Good morning, everyone. I actually did not give him the mug, but I sure hope that he embraces the words on the mug. So it is our pleasure to welcome you to what we referred to as earlier as beautiful sunny Vancouver. I've actually seen it like that a couple of times over the past 90 days and in our Lululemon store support center. When I spoke to you a few weeks ago during our earnings call, I shared some of our visions and strategies to continue building Lululemon into a global iconic brand. This will happen by delivering premium technical products, authentic emotional connections in our communities and sharing who we are and what we stand for confidently, consistently and globally. Most importantly, we will continue to lead the market that we created as an originator brand. So throughout the course of today, you will experience Lululemon firsthand, meet the people that make Lululemon what it is, hear from our leaders, hear about our priorities and what we're up to. So there was never a doubt when I took on this role that Lululemon's business model works in a fundamentally unique way. And over the past 90 days, that's been validated further and further. We have created a large global growing sustainable market validated by the recent focus of our competitors on the category. Our product, our store experience and values transcend cultures and resonate with our guests around the world. We have an exceptional brand that has deep emotional connections, and our brand loyalty remains incredibly strong. Our vertical model gives us the ability to create an experience that is intentional, unique and coordinated across all of our guest touch points. And our store productivity continues to be the best in the industry, and our operating margin is both strong and sustainable. So when I think about how we will be collectively writing Lululemon's next chapter, the question I ask myself is this. How does Lululemon as an originator brand keep meaningfully leading and achieving global sustainable growth with women's as well as men? If you ask me what makes Lululemon, Lululemon, I will point out our collective relentless commitment to pushing the envelope. Our ambassadors, our designers, our educators are living and breathing our lifestyle every day and are at the very forefront of that lifestyle. They live the life that our aspire that our guests aspire to. And I recently used in one of our all staff meeting Alan Kay's quote that says to predict it's easier to predict it's easier to invent the future. To predict the future, you might as well invent it. Lululemon has always been about inventing the future. There was no market for $98 yoga pants. And certainly, nobody taught us to put our fixtures on wheels so that we could move them around and offer free classes. And most importantly, we don't hire salespeople. We hire educators. We invest in their personal and professional vision and goals and their passion and relentless engagement that they display every day in running our store resonates with our guests all over the world. As a result, we attract and retain the very best talent in the industry and we generate some of the highest sales productivity. So I could go on and on, the point being that innovation and creativity runs in our DNA. We love creating from nothing and we love doing it over and over again. So what does that mean for our future? Well, think about applying these strengths to our growth opportunities. Our women's market is fundamentally rooted in yoga and a commitment to an active, healthy, mindful lifestyle. But our guess is not just about yoga, and we are anticipating through our educators, ambassadors and designers, were at the very forefront of her ever evolving interest and activities. And so while yoga is still a big part of her life, she runs, she spins, she does TRX, she does CrossFit, she does the bar method. And the success of our run category really validates the strength of the brand beyond the yoga studio. Tara and Diane are working on new categories, which we will present when the time is right. Further than that, I mean, beyond yoga, running and CrossFit, the recent success of our ENGO capsule, which I'm sure you've seen, speaks for the elasticity of the brand as we follow our guests from morning to night. This lifestyle product collection resonated with our guests exceptionally well and will become an important part of our collection. So as we build this new segment, it will be consistent with our history of designing technical products. The products will be technical, the features will be brilliant and the execution will be beautiful. To address these needs with focus and to deliver uncompromising technical product, we are building dedicated parts with designers and R and D engineers to support those specific categories and those specific fabric development groups. Moving from women to men's, Felix will speak our men's department, which by the way just moved into their own space, which is probably the nicest space in the building right now, just recently moved in their space on the 3rd floor. So in the men's market, we are creating a we are at the intersection of performance, style and versatility. And that's what is so distinct about us. We have a dedicated men's division with inspiring leadership, and we do expect our men's growth to continue to outpace our overall growth for the next few years. For those of you who have tried our product, you know how well it performs and you sure know how great you feel when you're wearing it. Having won a whole lot of that product for the past 3 months, I've been amazed with every piece that I've been getting from features to fabric to how well it functions. You can get on the red eye tonight, land in New York in the morning and have unwrinkled pants that are like totally dry. So we are focused on men adopting Lululemon by creating a store experience that is more specifically designed around them. Several of our new stores in Miami, Los Angeles and Vancouver will have dedicated men's space with their own visual language and some will have separate men's entrances. It will remain co located with our women's stores as she still remains a significant part of how he gets his product. We see the opportunity for men approaching $1,000,000,000 in revenue over the next few years and are investing accordingly to bring that vision to life. And we will enter a new international market with equal excitement for men's and women's. Now moving on to EVIVA. EVIVA is another great, great example of origination. In addition to introducing girls to beautiful technical wear that is specifically designed for them, we're engaging the young girl by sharing our culture and values and engaging her in her community. As she enter adulthood, the evolution to Lululemon and our culture, our values and what we stand for will be natural. Our EVVAS strong performance is strong, very strong with double digit comps and with store productivity closing in at $900 per square foot, already one of the best in the industry. Paul Zengel, who will be on our Q and A letter, has been leading Eviva for the past 2 years. And we look forward to building this little sister of Lululemon into a substantial part of our business with a $500,000,000 potential. We will be opening 10 new stores this year, 2 in Canada and 8 in the U. S. So to make sure we have the right tools and resources to create the future, we are actively investing in innovation across functions. I will be joining you for 2 of our new white space workshop later on this morning, maybe early this afternoon, And you guys will actually be the first one to discover it. I mean the place is incredible and I think you'll be blown away. This space gives us the resources and tools to innovate, experiment with new fabric, bring product to life faster and wear test our apparel in real time and in any conditions you can find on the planet, whether it's temperature, humidity or elevation. And probably a whole lot more that Tom Waller will describe in details that are way beyond what I understood last time I took the tour. So fit, function and performance is permission to play at Lululemon. And the white space workshop will give us the environment to continue to lead our industry. Now let's talk about magic. Lululemon's magic has always been in its ability to combine beauty and performance. And we are returning to our design led philosophy by continuing to invest in exceptional design talent to support our growth across categories and how we expand internationally. Our organizational structure, the magic is really created in our organizational structure by the healthy tension that we have between design and performance. That tension is our insurance against compromising either. And Tiara has recently led a restructuring of the merchandising group, which will provide us with the ability to build a globally inspired line, while at the same time allow for customized assortment at the store level, which will further enhance the guest experience. So last but not least, we are continuing to invest in supply chain and quality with the goal to achieve critical three critical objectives: create a scalable platform as we continue to expand across categories and internationally create nimble processes to shorten our lead times and bring product to life faster and drive operational efficiency to support and maintain our margin performance. This work is ongoing, and we are seeing key metrics improve, and Jennifer will talk about that further later on. So for years, we've initiated, enjoyed and sustained exceptional relationship with our guests. The quality of this connection sets us apart in the industry, and we've set clear new benchmarks. Last year, in the midst of the distraction with which you're all familiar, we became protective of the brand and lost some of our focus on the guest experience. We are doing a deep dive of all of our guest touch points to ensure that we have a fantastic welcoming inclusive experience every time we deal with our guests, both online and in stores. And our goal is to align our objectives and incentives to solidify long term guest loyalty. The recent implementation of our 5 year promise is a great illustration of instilling confidence in our guests on how we stand behind the quality of our product unquestionably. And Delaney and her team are leading all of this strategic work across all channels and we're also accelerating our focus and investment on customer relationship management. This will allow us to gain a deeper understanding of our guests and build personalized experience both online and in stores. We are barely scratching the surface of what these tools will do for us and the potential that we will unlock for Lululemon. So with deeper understanding of our guests, we can tailor their Lululemon experience to keep it relevant wherever, whenever and however they decide to engage with us. We have the competitive we have a very significant competitive advantage doing this given our vertical retail model and the emotional connections we have with our guests. This and I discover that every day. I mean, these authentic collections pulls us in all the communities in North America, in Australia and New Zealand and everywhere around the world where we have showrooms. And while we have different cultures and languages, we all share the basic human need for connections, and Lululemon is a place where we make that happen. The implementation of customer relationship management will further strengthen those emotional connections. Finally, I'm incredibly, incredibly excited about the prospect of Lululemon spreading its wings and becoming the global brand that leads the athletic premium apparel market. I was in London 2 weeks ago for our store opening. Yes, we did do that. And the response from our guests was overwhelming. We've exceeded our sales target by 60% since the opening, and we're going to build on this momentum to continue showroom and store rollout in Western Europe. The Western European market in itself being a multibillion dollar opportunity. In Asia, our Hong Kong and Singapore showrooms are performing very well, indicating pent up demand in the region. So our Asia General Manager Ken Lee, who just finished his onboarding in Vancouver, he's on his way back to Hong Kong to gear up showroom and store rollout in the region. And Christy Mains, who's one of our strongest operator, just relocated to London for 2 years to build the local Lululemon team. Her deep knowledge and her understanding of our DNA with the ability to build the local team will help us in accelerating will be key in accelerating our European rollout. So we have countless over and over examples of the brand resonating with people around the world. And the international opportunity has the potential to be even larger than our North American market. So as we look forward, we are prioritizing the largest and most strategic market across Europe and Asia. And you may wonder how we may estimate the full potential of those markets given that for the most part we've created them. Well, as far as how we prioritize, we have a strong market planning function that has developed a rigorous and proprietary methodology that leverages both demographic population income expenditure and psychographic data, lifestyle activities, where people live, where people shop to project the full market potential of every key city in the world. But while we analyze market data in a whole lot of depth, the magic really becomes in the mix of the science and the art. So we use the science, which is the data I just described, but the art comes through how we build showroom, how we grow community, how we spend the time to understand the cultural intricacies of those markets and bring Lululemon to those markets. And it's the magic that gets built between the art and the science. And in terms of defining market potential, John would probably tell you that the last time he put a slide together on market potential was during the IPO and the yoga market was described as a $500,000,000 market. If we had limited ourselves to the yoga market, we wouldn't be $1,600,000,000 today and we certainly would not have as deep an understanding of our guests, our lifestyle and its evolution. So the same opportunity exists for us in the global market, and we're going after it. Given the vastness of that market, there are many cities in which the question is not will we have a store, but when will we have a store. What we're doing in those markets is that we are compressing the time line by activating our market opening activities in a parallel way as opposed to a sequential way. This will allow us to go faster to market without compromising any of the most critical parts of our process, which is building community. So you've heard me talk about the amazing people we have in the company and how they power the Lululemon engine. Our strength and distinctiveness is in authentic relationship building, one guest, one ambassador, one community at a time. And we have what everybody else wants, a mission and a vision that's being embraced by everybody that works for us and with us. It cannot be copied. Cannot be mimicked. It cannot be replicated. So what we need to do is we need to continue to invest there. Do what do more of what we do best and then invest in sharing that story and amplifying it. So to amplify our stories, which I discover every day, we're working with early ambassadors that are helping us across product development and that we're supporting with their golden vision and creating an authentic global voice for the brand. So we will develop platforms to capture these stories on how we elevate the world from helping our guests set amazing goals to training a community for a half marathon to our stores surprising and delighting our guests with random acts of kindness during stressful time of the year. And Laura will go into further detail during her presentation. So our brand building strategy is incredibly unique. We do not need to endorse assets. Asset is the traditional way. We do not need to pay them to wear our product. And we certainly do not need to advertise in a traditional way either. As with everything else, we've created our own movement. And looking ahead, we will stay true to that mission, elevate the world to greatness through authentic human relationship and amplify our voice to share who we are, what we stand for and around the world. This will strengthen our loyalty, the loyalty of our current Lululemon community and grow it. So in summary, we are incredibly optimistic about the road ahead. The global size of our playground is massive and our opportunities to grow in a controlled, sustainable way are limitless. So hold us to these three things: being design led and delivering beautiful technical product with outstanding quality focusing on authentic relationships and sharing amazing stories that make our guests so passionate and bringing new guests to our community by accelerating our men's growth and our international expansion. I look forward to meeting all of you today and answering any questions you may have. And before I pass the mic to Tara, I would like to acknowledge the team that I'm working with not only directly every day, but everybody in this building and in our stores. It's an amazing group of people. Thank you. Good morning. So I've met many of you over the past 5 months. I started here at Lululemon in November. So I was at ICR in various analyst meetings that I've been in. But I want to for those of you I haven't met, just really quickly, I want to introduce myself and a little bit about my background. I have, wow, over 25 years of experience in vertical retailing. 15 of those were spent working at the Gap and was so deeply fortunate to have worked for Miller Drexler, who was I would say was so instrumental in both my training and mentorship. I also worked at Children's Place and then most recently for Sears Holdings in the mass sector running a multi $1,000,000,000 Kmart Apparel Business. So why was I attracted to coming here to Lululemon? I am a lifelong athlete. I grew up as a young girl ski racing and someone who's been wearing ill fitting men's apparel for my athletic needs my whole life, when I discovered Lululemon, I was blown away by not only the fit and the function, but the beauty. To have a brand recognize that you can be a killer athlete and at the same time have permission to feel beautiful in the product to me was the ultimate girl power. I was like this is a brand I respect. I want to be part of this brand. So my question today is, how are we going to create global greatness in the next stage of our growth? And I'm going to have various members of the product team help me answer this question for all of you today. So first, Diane Schweitzer, who is the SVP of Women's. Diane and I are going to do a little tag teaming today. So I'm going to start off talking about technical meets beauty. Then DeAnne is going to come up and she's going to expand further, give you a little bit of background on how Ocean, who's our muse, is evolving and then talk about the innovation that we are working on. Then Felix Del Toro, SVP of Men's is going to come up and take you through how we're originating in the Men's space just like we did in Women's. We're going to do that in Men's. That's what we're here to do. We've set out to do that. And then I'm going to come back up and take you through AVEVA and talk about how we are creating the next generation of powerful women. Jennifer Batisby is going to really round out the presentations and Jennifer is the SVP of Global Sourcing, Quality and Commercialization. And she's going to outline how she's laying out a foundation to support a deeply rooted culture of innovation. And also you heard Laurent talk a lot about our global growth, preparing us for global growth. And then at the very end of all the formal presentations, Tom Waller, as Laurent said, is going to take you through the white space. And in white space, we're working on not only short term innovation, but this is where you're going to see that longer out innovation coming from us. And we're very excited about that. So how do we create greatness? Beauty meets technical. We own this. We were the originators in the space of bringing beauty and function and fit together. And I'm going to do be super aggressive about maintaining our place and our ownership of this. So a lot of you guys have queried me over the past 5 months, what are you guys doing about all the competition coming into the market? And one of the things I continue to reiterate is I love where we sit in the marketplace. We sit at the top, right, in that more premium sector of the marketplace. And why do I love that? Because I'm seeing a lot of people coming in, in the middle market, right? I know that middle market, right? I've been in vertical retailing my whole career. And one of the things about technical fabric, when you are using expensive and beautiful technical fabric like we do here at Lululemon, once you put that beautiful technical fabric in a product, there is not a lot of CMT left. You guys know CMT cut make and trim left to be able to meet those price points that you need to meet at that mid tier. We can put all of that beauty, unique trims, high needle finishing, innovative trims because of where we sit in the marketplace and our price point. So I'm going to be pretty transparent. I'm not probably telling you anything you don't already know. We haven't always been as consistent this past year in bringing the beauty and technical. And I see some of my female friends down here nodding their heads. And we know this. The team had a lot of distractions last year, Luan being one of them. But I can tell you the design team is hyper focused on bringing technical and beauty to every single product that goes in our store. And the reason why I'm belaboring this point, because some of you guys have heard me already talk about the technical and beauty. The reason why I'm belaboring this point is that's our table stakes, right? That's the foundation. We got to make sure that's solidly set. And because from there is where we're going to innovate from. And Dan is going to share some of the innovation we've done with and Go. But let me tell you, we're just getting started. And we're excited about the things that we can't talk about today, but as we go forward, we'll share. But we're really excited about the innovation that we're going to bring forward. And bringing technical and beauty to the product, we also have lots of conversations about seasonal versus core and I know we're going to probably get that in the question and answer today. Beauty and technical, when I'm talking about this, this doesn't matter. It doesn't matter whether it be core or whether it be seasonal. Every single product should have this beautiful synergy, so that we're constantly delighting our guests again and again every time they come in our store. So moving on. So today what I'm going to do is I'm going to take you through a series of concept boards that we put together for the design team prior to the start of designing spring and summer of 2014. And I'm going to show you these concept boards and then you're going to be able to see how the designers took that and then inspired from that and how it showed up in the product. One of the things that I just want to make sure is that you guys all understand that every single one of our designers, they're athletes, whether it be on the men's side or the female side, right? And they are constantly, constantly using the product and perfecting it. So they know what's going on in the runways. They love that. But they also they're athletes. And they love making sure that everything, the performance is there and we're constantly analyzing that and challenging each other. I also really love the beauty meets technical in the sense of creativity needs constraints. And when you have constraints on creativity, it's amazing what you can create from there. And we believe that technical and beauty those are our creative constraints. So with that, I want to take you through these concept boards. So you can see from here we had laser cutting that we were exposing peplums we talked to the team about, camo, floral, photo real, tailored which you'll see more in the ENGO product, micro pleating. But again, I'm just going to keep underscoring performance above all. So what I'd like to do is bring 3 models out today, so we can share with you how all of this great inspiration showed up in the product. So if the models could come out and I could take you through that. So we talked about camo and this is our 650 fill little vest which did incredibly incredibly well in the stores. This is something that was in for about a week that should have been in for 4 weeks. We love, love this product. And underneath you can just show again from a technical perspective, you see our Silorescents, our proprietary anti sync property, our run shorts with 4 way stretch and then also her run backpack with reflective. Then we have the whole photo real trend. You can see it showed up in our tennis outfit. And then underneath that we talked about the there's really important mesh trend happening right now beside mesh. And again it's beautiful but it's there for a purpose. It's for venting. You look at the front, she's got a great bra on that was done by the Fast Turn Group, again with beautiful mesh detailing all for breathability. And then the peplum trend showed up oh and then the perforation cut out in the bag and then our great and go jacket, which if you can turn around, where you can see that whole peplum trend taken into the jacket, our shine tights. Reflective again is super important across all of our stores. You're going to see more of that as we go into holiday. And then the peplum top that's underneath if you can just take off your jacket. But this to me is when we're at our sweet spot, when we have highly technical product and we're bringing it together in such a beautiful, beautiful way. Okay. Thanks you guys. So with that, I'm going to turn it over to Diane Schweitzer and she's going to come up and take you through again how our female guest Ocean is evolving and take you through some of the innovation that's going on here at Lululemon. Thanks. Thank you. All right. Good morning, everyone. I have some notes. I'm going to bring some models out as well in a little bit. So I am Diane Schweitzer. I've been with Lululemon for 13 years, actually 13.5 and 10 of those on the product team. So currently, I head up the design and merchandising team for women's. And I love the theme this morning so far. Really, when people ask if I why I've been here for so long, it was really because I can't believe that every day I get to sorry, I should take a breath. Every day I get to get up and talk about performance, apparel, I'll say the fashion and just health. And all day that's what we talk about and they're paying us. So it's I'd be doing the same thing if I was at home. So that's why I'm still here after 13.5 years and we have a lot of fun. So I'm going to talk about do I have a slide clicker? Thank you. Thank you. Thank you. I'm going to talk a little bit about what we're seeing in the market. I think it's probably the same thing you're seeing, but I just wanted to summarize it. And then how really women's team is addressing what's happening in the market. So first thing that we're seeing is athletic is everywhere. The women's athletic market that Lululemon created 14 years ago, 15 years ago has become very popular and it's growing. It's everywhere. So as you guys know and as Tara talked to as well, every price point and every channel, we're not alone in this market that we created. And also as Tara spoke to, we are aggressively ensuring that we continue to be the leader in beautiful women's athletic apparel. And honestly, without distractions like last year, this and Laurent said the same thing, this is our DNA. So it's not going to be hard. We own function and premium. That's our market. So the second thing that we're seeing is yoga has evolved from the 14, 15 years ago that Lululemon was incepted. The yoga practice is hotter. It's more physical and athletic and you can find any kind of yoga class you desire. And also most importantly, our guest doesn't just do yoga anymore. So she's doing boot camps, bar methods. I know Laurent said all the same thing. There's she has expanded her sweaty pursuits. That said, yoga is still at the core of us and it's still at the core of what she's up to. I find when I go to a spin class or if I go to a TRx class, we're finishing off the class in a downward dog or my spin instructor is talking to me about how I'm breathing. Yoga has really in or filtered through everything we do today. So it's really at the foundation of a lot of these other sweaty things and it's still at the foundation of what we're up to as well. So finally, the other thing that we are talking about is health is the new wealth, which is why this market is growing. It's a macro trend. Luxury destination workouts are opening up everywhere, exclusive clubs, boutique fitness classes, dollars 30, dollars 40 classes at the drop of a hat, organic food, juices, skincare, basically all around us. There's a big focus on health. So who will invent the future? And well of course we are going to invent the future. How are we going to do that? We are going to stay hyper focused on our muse. We call our muse Ocean, she has a name. And when we know her, we win. So we stay really close to what she's up to and we create what she doesn't know she wants in the next season. So who is Ocean? Who is she today? She's different than she was 14 years ago. She's really busy. Technology has allowed her to be on the go all day and get a lot done. I was going to read this. It's basically from the time she wakes up until the time she goes to bed, she is on the move. So what we're up to is really making her life simple. So with work, lunch, dates, yoga, run, dinner, drinks and friends, so with this evolved ocean in mind, this is where and go was created. So this is where we've innovated into a brand new category. So using our technical luxurious fabrics and created beautiful tailored garments that is exactly what she wants to wear day and right into the night. So and just this is really key, all the function and all the performance of our fabrics and all the details of our athletic sweaty stuff into designed into street, work, travel. So it's exactly what she wants to layer up and layer down with again in this super busy lifestyle she has. So the functional details are key to this line. They'll have reflectivity, super easy to care for, Laurent talked to that. Transformable, they'll be reversible and really smart pockets. So basically leave home, one outfit all day. I'm going to show you a short video. It gives you an essence of what this line is and the models will make their way to the stage and I'll show you some of the product. All right. Thank you. I like that turn you guys did. All right. So I'm going to start with Melissa. Melissa, you've seen the dress. It flew out of the stores. We've showed images all morning of it. We love it. It is really the direction of this line. What is so cool about it, you've got wicking, 4 way stretch, breathable fabric. This fabric actually is similar fabric to our bathing suit fabric, our swim line, 2 layers bonded together. So you've actually also got UPF in there. So you've got some protection. The one thing I forgot to mention earlier, all these garments are all constructed, so there's no seams up against your body. Super easy care. So Melissa has just come from a hot yoga class. She's got her boogie shorts on underneath. She has an energy bra underneath as a bra and she throws the dress on and really honestly, I don't have to say it again, but takes her right in tonight. Thank you. Ali here has on again similar fabric, but it's just the one layer, all bonded construction. So again, no seams up against her body. We'll turn around. Gorgeous cutout in the back. So it's lightweight, it's breathable, it's got sun protection, it's stretch and it wicks moisture if she still got a little bit of moisture on her from whatever she was just doing. Gorgeous bra in the back and a very, very actually functional pair of run shorts, but we thought looked so beautiful with this top. Thanks, Sally. Catherine is wearing our front racer tank top. I love this. It can be worn to the front. It can be worn turned the other way. We've got it on like this. I think the front racer looks gorgeous on all body types. And then she's dressed so that she's actually rode her bike to her professional job. So when she gets there, she might throw on a blouse over top. But these pants, again, 4 way stretch. They have great pockets. This is a little reflective detail that she'll pull out because it was early in the morning when she rode her bike to work. And then when she gets to work, she'll just tuck that little triangle in, throw on a beautiful sweater. It's got the tuxedo, beautiful tuxedo kind of inspired stripe down the side. And again, she could put on a nice pair of boots and head from work out for drinks with her friends. So that's it. Thanks, girls. I have my notes here. Hopefully, I didn't forget anything. Okay. So the next thing I'm going to talk about, which we're really excited about, no one's mentioned it, so I get to well, actually Tara alluded to it, but it's our fast turn group. So this is where we've really innovated in our time to market. We call it our fast turn team. Their job is to get product to market in 45 days, which I know is not new to you, but it is what makes it special is that we're getting technical product to market fast. The team is up to 4 things. They look at trends and they look at what we've got coming in our line and they fill in critical gaps. They're also testing new styles for us. So we quickly get a style into the store. We get a quick read on that style and decide how big a bet we want to make on it in the next 6 to 9 months. The other thing they're up to is they use up our excess fabric that we own. And 4th, the team is also paying attention to styles that are trending and selling really well at our lab and getting them into our stores and e commerce again in 45 days. So this is a small entrepreneurial nimble team with what I call with big muscles. So we'll continue to leverage this team and build a global plan around the success of what we're doing here. I don't want to talk too much because we did do a really great video with these guys that really showcases what they do. And then we'll look at the product that they built in the video. So that's it. We'll play the video. If you could describe it in one word, what would it be? Oh, gosh. Laura, I think she's decisive, which is what I'm not. So I appreciate that. You're truly inspiring creative. I create. I create, she decides. My name is Kara and I'm the Fast Turn Designer. My name is Laura and I'm the Fast Turn Manager. So the Fast Turn team, we're a small team that works outside the normal design calendar and we take what's going on in the world, the market and our current business and we affect business now. So typically, it's 9 months from idea to in store. We can execute in 45 days. As we know, in the business of fashion, there is always waste. It happens when you cancel a style. It happens when you reduce the unit and you end up with leftover material. So what I expect me most about working on Fast churn is my ability to reduce that waste. Because we operate so close to market, it's much faster for us to use materials that are already existing in the world. Plus it reduces our footprint. The thing about fast churn to get down to 45 days, you need to squeeze development time and leverage available raw materials and capacity whether that's Asia or local. As a team, we need to be quick and decisive and we're very in house focused. So Cara will design, make patterns, swerve samples on 48 hours. So when we send information out to the factory, our collection is fully baked. What we know about mesh right now is mesh is a huge trend out there. It's athletic, so naturally fitting with Lululemon. And in the peaky of summer, it's just so us. We had to go after it. We already had mesh in the line, but we want to make a more overt statement about it. Exactly. So to start, we look at what we already have in the stores that maybe we didn't buy enough of or core pieces that we could add mesh to the back of or where can we add mesh to our current styles that people are already loving. Plus what's happening in the market that maybe we missed 9 months ago like more overt mesh, paneled mesh, and we bring all that together and create a collection out of it. We're really excited to show you a preview of some of our favorite mesh pieces tonight. It's probably in the morning, so I can redo that. We didn't redo it obviously. So we'll bring out the models and I thought it would just be fun to mention that I ran with Laura in the trails this morning, so that designers are athletes here at Lululemon is true. So we ran for an hour together. And what else was I going to mention? So I'll just I'll show you guys the mesh pieces that you're going to see over the next 3 months dropping into the store. We're again super excited about it. Maybe I'll get you to take your the mat off. It's hard to walk through the office right now and not see one of the girls, somebody wearing these tights. So we call these our tech mesh tights. It's basically just the block of our Wonder Under pants and then we've just added in the mesh panels. And again, as Tara spoke to, just add function because obviously it adds ventilation, a pant that you'll be able to wear further into the spring summer months because of the mesh. And then Laura and Kara are really passionate about making sure we get this dropped armhole trend in, so that and then the mesh panels in the back. So I'm forgetting what the name of this look is, but and then we're over to Nishka here and love this skirt. Of course, it's exactly what you'd want to put on even over a Wonder Under tight, but obviously also a cute little short. So the whole top layer is mesh, our Luan, our iconic luon fabric underneath. She's also got on a jacket with a great mesh detail in the back and we're also making sure that we represent that long line bra look in the store as well. Perfect. Thanks, Nishka. And another favorite outfit, beautiful, right? So just been to a hot yoga class, just been to a TRX class, throw the mesh piece on top, she feels a little bit more covered and then the pants as well, taking in the mesh all the way down the back of the leg. So great. Thanks guys. I am also now going to introduce my counterpart on men's, which is Felix Del Toro. So we'll have Felix come up. Great job. Thank you. Good morning, everyone. Thank you for coming. So I'm in a slightly different situation than Diane, and that is she's been here for 13 years. My 1 year anniversary is on Tuesday. So it's a very short time that I've been here. Previous to this, I was with Banana Republic and the Gap for 22 years. I did work briefly with Tara. And I was in that time span, I served in 8 different functional areas and lived in 3 different cities. Most recently, I was with Calvin Klein Underwear and I moved here from New York City, a little small island. And it's interesting because people say you're moving from New York to Vancouver. Why would you do that? So there's a variety of reasons. And one of them is for the first time in my career, I'm able to marry my personal values and goals with corporate values and goals. So being in a place where there's that fluidity is an unbelievable experience. I recommend that all of you, if you're not doing it today that you try it because it's an amazing place to be. It's an amazing space to operate in on a daily basis. The second thing is and DeAnne alluded to it as well, every day when I come to work, I'm surrounded by like minded individuals. I'm surrounded by people who are athletes. And that goes for any discipline. It's not just design, people who work in product development, people who work in brand, everyone here is active. And that's an amazing thing to always know. And when people leave at 5 o'clock to go to a class, you're like, hey, see you tomorrow. Secondly, people set and achieve goals. I'm very driven and I love to be challenged and I work with people who inspire and challenge me every single day. And then finally, to be a part of elevating the world to greatness is an unbelievable opportunity and to build a brand within a brand is an opportunity of a career. So I am unbelievably excited to be here and here I am. So what are we going to do? So the big question before us is how will an originator brand create a new market in men's athletic performance apparel? We're going to do this through a variety of ways. One of them is we're going to take a unique position. So obviously, it's a popular space. There's other people out there and we want to give him something that he doesn't already have. That's a reason for us to be. Secondly, we're going to disrupt the market. So we have to do something differently. And finally, we believe we have we know we have the permission to expand the boundaries of this category, which DeAnne just showed and I'm going to expand in the men's area. Who is our guest? So DeAnne alluded to Ocean, who is the women's muse. The men's muse, his name is Duke, and we call him the mindful athlete. When we think about him, one of the first things we talked about was as we're a design led organization and we're creating something new, how do we step back and do this differently and really take into account, who he is and how he lives his life. Because it's not about what we want, it's about what we know he wants and what he needs in his life. So in terms of who he is, he has progressive views on training. When he thinks about his health, it's not just body, it's mind body health. He's confident and obviously a lot of people can say that, but he's confident. He's gold driven. He's competitive. And so this is the big one. And he's well rounded and happy. He doesn't have to be one thing or another. He's a variety of things and he's comfortable in his own skin. How he lives his life. So the brand team we were doing some of our research came up with this old and I say old definition of athletics and it was, it's training for strength, agility or stamina. And what we know today is it's no longer or, it's and. And so he doesn't do one thing, he does a variety of things. He's not defined by a single sport. He may play team sports. He may have played team sports in high school and college. He could be a pro athlete today. But in order to be an optimal athlete, he has to do a variety of those things. It's not one thing that defines him. We also know that he has an incredibly busy life and he engages in athletics for a variety of reasons. One of those is to challenge himself and to be the best possible athlete that he can be and also to build a community around him. It's a way of social engagement. It's part of his life. While he's doing these things, while he's pushing his boundaries, while he's seeking out adventure, he's also having fun. And we think about this and we think about who he is because he's confident he can be really competitive, he can be really driven and he can also have a good time. He doesn't have to sacrifice one for the other. So now we're going to show you a short video. Obviously, we're a big fan of videos here. But we do believe and when we shot this and the brand team put this together for us is how to inspire the design team and really connect with who our guest is. So as Laurent alluded to earlier, in terms of our brand and who we are and how we show up in the world, we are about engagement with the community and really building a relationship with the guests. And obviously we're incredibly fortunate to have built, I'm incredibly fortunate to walk into the place where we've built the unique business model where the educators really do engage and have relationships with their guests. And we think about Duke, it's now our opportunity and differences and distinction is as we built this really strong relationship with her, how do we do that with him? And we know in order to do that we have to think about him differently. We have to engage with him differently. We have to go we have to train with him where he trains. We have to speak to him in his voice and we're going to amplify our relationship with him. Creating the men's premium athletic apparel market, how are we going to do this? As Laurent alluded to earlier, it's this intersection and we think as we had so many conversations about it, versatility sounded like a really simple concept. But when we paired it with versatility, technical performance and refined aesthetic it's something that doesn't exist today. So we know that we can build a very strong platform on that. And we also looked at 2 other axes and that is activity and situation. So in terms of versatility, he'll be able to use the garments in a variety of situations and activities and also situations. So when you see product in a few moments, you'll see there's product that he can wear working out and he's going to look equally good if he goes to brunch or if he's traveling etcetera. So it really is about embracing his lifestyle. So in terms of bringing these three things together, we're allowing him to do more with less. We're giving him freedom of choice. And we're not providing him gear for his active life, we're providing him gear for his life, which is active. Designing for him. As I spoke to who he is and how he lives his life, it led us to a new product architecture because he's not focused or fixed it on one single sport and he is well rounded. We had to think, okay, so what does he need? So we said he's either sweating, he's going to or from the activity where he's going to sweat or he doesn't want to sweat at all. So we call it sweat, post sweat and no sweat. And our goal is to achieve and ensure that when he doesn't want to sweat he's not sweating. So if the models can come out I'm going to first speak to sweat. So when the company talked about and alluded to building the men's business, there was a lot of buzz in the world that we were building the men's yoga brand. So the reality is and as I've discussed, the mindful athlete in all likelihood does yoga, but he doesn't just do yoga. He does cardio. He does functional strength training. He does a variety of things. So what you see in front of you is just a small sampling of what's in the store for summer and it really does span a variety of activities. So I'm going to start with Matt. Matt is wearing the metal bent tee which is our exclusive it has the exclusive Silverson technology which inhibits the microbes that cause odor because we know that guys do think when they sweat. I think it's reality. So we're going to deal with we're dealing with that and we're helping him deal with that. And also he's wearing so he's really just for running but the tea is multi sport. So he can wear it running, he can wear it strength training, he can wear it to yoga, he can wear it however he'd like. But it does wick moisture, it's 4 way stretch. And again, he's not supposed to stink even though he does. Sorry, Matt. And then below on the bottom he's wearing the surge tight and the surge short. The tight wicks moisture and it's a multi sport tight. He can wear it for a variety of things. He can certainly wear it on his own for running. He can wear it with a short over it. He can also wear it for strength training. And then the short is designed for running with interior goo pockets as well as a secure pocket in the back for his phone to ensure that he has his necessities whenever he's doing. Thank you, Matt. Next we have Troy. So and Troy is really built for functional strength training. So he's wearing the assert tech short which has slips on the side so that when he's doing squats or lunges it doesn't inhibit his movement. Again the fabric and prominently in sweat everything is 4 way stretch moisture wicking to ensure that he really does have everything he needs when he's working out. The tea is also silversum technology because we are going to do everything in our power to not let him sweat or not let him stink. Sorry about that. Thank you, Troy. And then finally, we have Tim. And Tim is wearing the Silveresin singlet, which is designed as multi sport. So he's got it paired with a yoga bottom, but it does have reflectivity details in the back as well. So if he wants to go for a run after he goes to yoga class or if he's running to yoga class, in the desk or in the evening, he can certainly do that and he'll be safe, which we want to make sure that's possible. And then finally, Tim is wearing a new yoga short. It's the For the People yoga short. As I mentioned, we're more than yoga, but we are going to be the place, we are the place. If he does yoga, he's going to go to us first. We will have that yoga gear when he needs that specific gear. So he's wearing the Luan short which is a cotton hand. It's 4 way stretch. It has a slightly tapered leg, but when he's doing inversions, the boys are still protected and nobody's seeing anything that I don't need to see. All right. Thank you, gentlemen. So the next category is post sweat. And in post sweat, we know he's going to and from the gym, he's going to and from training, whatever he's doing, when he goes there he's going to take a layer off. So how does that layer help him get there, so it keeps him warm? And then afterwards when he's leaving the gym or his training is ensuring how does that layer wick some moisture away from his body to keep his body temperature stable. So the pieces you'll see in this segment are really designed to get him to and from. But as we talked about situationally earlier, he can also take these pieces and go beyond that. So it really is to give him that opportunity and that choice to move throughout his life. So if we can get the next two models, that would be ideal or I could stand here in silence. We're going to weigh this out and see how it goes. Could take a few questions, tell a few jokes. Luckily we do have Jordan, I think we'll have a second model joining him shortly. So and we purposely blended Jordan. So Jordan is wearing the Elkhurrent board short. So it is a lightweight four way stretch fabric that drives quickly and it's fully bonded on the interior. So no chasing because nobody needs any chasing ever especially down there. And then what we did was we thought okay so Jordan is going he's in the water he's coming out he wants to layer something over it. He has a rival singlet underneath which is made of VITA C which is a premium natural fiber that has four way stretch and again is really good for wicking moisture from his body afterwards and the rival hood. Okay. Thank you, Jordan. And Tim is back. Thank you, Tim for returning. So Tim is really our post and he's our to and from guy. So he's wearing the Vita CT with a graphic design on it. So it's still a great T shirt and he can wear it in a variety of ways. And then the pant that he's wearing, if you'll notice there's an obvious connection here. It's the In the City Limits pant and this is a French terry pant that he can layer over his gym shorts when he goes to work out, but he can also wear them on the weekend. So it really is this refined aesthetic and the ultimate level of performance so that he can wear it wherever he wants. Awesome job. Thank you, gentlemen. And finally, no sweat. So as Dion talked about, you get up, you go technology and then every morning you hit the reset button. So we're designing gear for guys who have a busy life, may have a casual work environment and may commute on his bike and also travels. So it really is designed so that when he's out there and Laurent alluded to it earlier, the garments don't wrinkle. So Troy is back and he is wearing the MWB blazer and the Chino On Emission pant. Both of these garments are made with our warp stream fabric which is 4 way stretch and it also wicks moisture. So the 4 way stretch allows him to move freely. So if he does want to hop on his bike and ride to work he could easily do that. If he wants to hop on a plane when he gets off he's going to look this good. That's the goal. And then he's got vents in the jacket. So if he gets too hot during the day or if he's running late for a meeting he can certainly cool off a little bit and he can turn around Troy. There's a reflective detail here. And then the pants have a draw cord, so it doesn't get caught in his chain. And then below that he's wearing the Vita C rival button down. So again, this really beautiful refined aesthetic and that he can wear how he chooses. Thank you, Troy. Stretch your head. No, you could all be scratching your head. But stretch your head was a tagline for that we utilize internally. The brand team when they were doing their research and we really enjoy quotes, I enjoy them myself as well. But they came up with this quote from Oliver Wendell Holmes and it was man's mind once stretched by a new idea never regained its original dimensions. And so we toyed with a couple of things. I should say we, they toyed with a couple of things. We talked about Stretch Your Mind and we landed on Stretch Your Head because you kind of do that. You have to stop and think about it. And that's the goal. And so we know that the athlete that we're targeting and the guests that we attract has those moments and we're going to be there for him when he has those moments. So thank you very much for your time. I look forward to your Q and A and please welcome Tara back. All right, Aviva. So you heard from Laurent today about the potential of Aviva in North America. So I have many years of running kids businesses. I ran the Gap Kids and Baby Gap Business. Children's Place was also with Children's Place and then at Kmart, I had a very large kids business. So it took me all of about 2 minutes of walking through the door back in November to see the unbelievable immense potential of AVEVA. So what are we up to? We want to create the next generation of powerful women. So how are we going to do this? So developing the female athlete, that's how we're going to do it. And the Aviva girl, she's an all around athlete. Studies show I mean I'm telling you guys a lot of what you know, girls who participate in sports have more self esteem, they have better body image and they actually experience a higher state of psychological well-being. So we're creating product for all of her athletic pursuits from dance, yoga, skate, run. And the really cool thing that we do in Aviva like in Lululemon, we use our girls' feedback in our design process. The design and merchant teams are going to be on the East Coast, gosh, I think middle of May and they're doing design meetings with our girls while they're visiting stores. And for the young girls to feel like they are part of creating this brand with us is pretty amazing. And our moms love our product as well, the quality, I always call it the hand me down quality, we used to always talk about that at Gap Kids and Baby Gap how important that was that you have this quality in the product that she can hand down. And we're using all of our beautiful superior technical fabrics in the apparel. And we also are using things like our ecstatic yarns that inhibit the growth of odor causing bacteria because what I've learned since I have 2 boys, I have 12 14. I thought only boys leave their sweaty workout clothes in their locker all week, well I guess girls do this too. So our mom appreciates and understands the value of those proprietary yarns that we use. We could use cheaper finishing as other folks do, but they don't work as well. And we only want to bring the best to our mom. So what else? How else are we creating the next generation of powerful women? Kids are more stressed than they've ever been. I know, I mean, again, I've got a 12 and a 14 year old at home and I can tell you what I see these kids under the stress of school and friends and sports and what's expected of them, We didn't have that when I was in middle school. And the Aviva team are so excited about bringing yoga and mindfulness to their guests and really teaching that practice because that is something our girls can use their entire lives to lead healthy and productive lives. So I'll just back here. This image was from one of the showroom openings that was seating Southern California, seating the South Coast Plaza store. 40 girls met at our studio and walked down to the beach and were given a yoga class by one of our Lululemon ambassadors. And the photo that was taken was one of was taken by one of our former Aviva guests. She'd outgrown Aviva, but she had aspirations of being a professional photographer and we actually used this photo on our website. So nurturing the next generation of leaders. The vision and goal writing that was so important in the Lululemon brand and also here at the SSC, we are bringing that to AVEVA. And we actually teach vision and goal setting in our stores and teach the girls how to use this incredible tool that allows them to realize all their dreams. They understand how powerful it is. A really recent example is Kya Lear Marshall and she's one of our guests and she wants to do amazing things with her life. So she asked if she could come here to the SSC and have a private vision and goal writing session. She lives about 2 hours away by plane and so she came in and had a private session. And then one of the things that she wants to do, I just talked about yoga and how important that is bringing yoga to kids, that's what she's up to. She wants to bring yoga to youth. And so she taught a class here in our new yoga studio. I think some of you probably went to yoga this morning. She got to teach a yoga class in the studio with 30 girls. And we actually flew her in today, so she could be part of our function show. So I'm going to have our first two girls come out, so we can show them the outfits. So this is Kaia who I was just talking about and of course she's in a yoga outfit and I can't stress enough, we use all the same fabrics that we use in Lululemon. So it has all of the high performance qualities from her rhythmic type to her double Dutch tank, her great bag with tons of function on the inside and her yoga mat. And then, right, so that's Kaia. And then we also have Charlotte today in our tennis outfit. So she's working she's wearing the perfect your practice jacket in our Luan, our famous Luan. She has her tennis skirt on, you want to turn around so they can see how cute that is. And then her tank that's underneath is also with ventilation and breathability. Do you want to turn around for our girl? So you guys want to just you can stay right up here. Do we have let's have the next 2 girls come out. So why don't you 2 stand over there. You guys are doing great. So for Run, we have Chloe and you can see that she has on our PACE pocket pullover with just great ruffle detail, lightweight sun protection hood and our 4 way stretch shorts, beauty shorts. And you can see we took that perforation trend that we talked about and put that into her cap. And then underneath she is wearing the silvarescent shirt that we talked about. And I think that's it. And then Maya, she is actually a ballerina and she loves Aviva product. She actually asked if she could wear own ballet shoes today. So but she just looks beautiful in our practice wrap with a great free movement tank, our leg those are our leg warmers and then the Rizmik Tite, again all in our high quality Luan fabric. So I think the girls look so beautiful. Thank you so much. All right. And then I don't is Natalie here? Natalie, will you just so Natalie and then I think Paul is here. If you guys would just stand up, Paul, will you stand up? So this is these are the people that have made Reviva happen. So anyways I just wanted to introduce you to both of them. So thank you. I'm with our guests. So those are the reasons that my team that what we're doing is why we get up because of those guests and what we can create in the new market. So the question that we are asking ourselves is how do we continue to be a leader in the retail community? So I have 3 key main focuses that we're focused on and that we're talking about. We are so special in what we do. We create such a unique experience that people feel part of what we are creating. We listen to our guests at all touch points, whether it be through our design meetings, whether it be through our product calls with our educators and managers. We're listening to our guests through the whole process. We know that we have an advantage. Our advantage is our vertical model. We know we're best in the world at design and creating the best product and we also have the end result of that educator being able to educate on that product. So end to end, we have such a huge advantage. So it's not about changing our DNA. It's not about innovating who we are as a brand or who we are as a company. It's about being more of us. It's about bringing more of us to all of our communities. So when we think about what we need to do and what Laurent had spoke to is accelerate what we're doing and how we're doing it, so that we can continue to bring this experience around the world. So the first thing, the first thing that our focus is, is thoughtful market seeding with a community focus in building brand stores. So what does that mean? That means the showroom strategy you guys hear so much about. I told you that we started in Toronto with a rolling rack and we got better and now we're actually very, very good at it. We will open showrooms around the world. We have showrooms international today. We have 8 in Asia, 7 in Europe. But what is really, really important about these showrooms is that these showrooms allow us time to find the right people so that we can hire great people that share our vision and goals, share our mission, so that when we're ready to open a store, we are ready. So people is a big part of why we do showrooms. Another big part of our showrooms is understanding the market. So it gives us time to get market knowledge. Where does she sweat? Where does she hang out? Where's the best coffee place? Where is she shopping today? So we get really, really good market knowledge before we open that store. We actually look at the showroom sales and our trigger in the U. S. Has always been 10,000. So with our showrooms open at limited days, we want to hit 10,000 in sales before we open the stores. For us, that translates into a $3,000,000 or $4,000,000 store. So we're tracking our stores our showroom sales so that we can get ready for a store. And then it's about seeding our product. It's about finding key influencers, people in the community that are the leaders of our community in athletics and getting our product on them. So these showrooms have a huge purpose and they will be part of how we continue to grow. What we've done a little different in London and Hong Kong is one thing we learned in New York is we opened one showroom and it's a big place that New York. So we weren't getting out as fast as we wanted to. So in Hong Kong and in London, we actually have 4 showrooms that we're running so that we can accelerate the pace in which we're meeting people and hiring people. The second big piece of thoughtful market seeding is our real estate. So our real estate, we consider our real estate part of our brand story. So we want we use external data, so the demographics, so age, income, education levels for us to create a full market strategy. So when we looked at the U. S, we did a market holding capacity that told us that we could open 300 stores. But that wasn't the work. That was the what Laurent was speaking to, that was the science. Then we had to do the art. The art is what we see internally. So we track e commerce sales. We track our strategic sales partner sales. We track what each market in e commerce and where we're seeing a huge spike in sales. So we use all of our internal data also to match up with our external that allows us to make smart real estate decisions. And it helps us really, really know our guests so that when we open these stores, we're opening in the right place at the right time for them. The other piece, the third thing in our thoughtful market seeding is our community connectors. So this is also what is our ambassadors. Our community connectors are people that we find on the ground that know the market, that love us, that share our DNA and are up to the same things as us. So when we opened in New York City, we found 5 of the coolest local New Yorkers that could bring the brand to New York and be able to be our brand ambassadors in New York. We're doing the same thing in every single market. So we have people on the ground everywhere that are actually seeding our market in key places. They share our values and they share who we are as a company and they're up to big things in their life. They're raising the level of health and they're bringing out new athletics to the world and to all the communities that we want to open stores. So it's a perfect relationship and it's a partnership that we cherish and is a big part of who we are. So global, the one thing I just wanted to say on our the community connectors, we actually did this in Asia. So we took 10 of our best ambassadors in North America, the ambassadors that have been with us for a really long time. And we had them join us in something we called unroll Asia. And we toured all of Asia with our best ambassadors. And what we did was we introduced the our existing ambassadors with our new ambassadors in Hong Kong, Shanghai, Singapore. And we had a we toured all through Asia doing yoga classes and sporting events. So it was an opportunity for us to support our ambassadors in their goals of raising the level of health as well as it was incredible for these new ambassadors to see what we were up to. So we made best friends in no time flat. So we found and they found friendship together. So we built a community of ambassadors. So international, the I spoke to the global showroom. So when we're talking about market seeding internationally, we're not looking at creating a whole new program. It's about building authentic relationships. So we do that through our showrooms. Like I said, we've already opened 8 in Asia and 7 in Europe. We had we were opening our mainland our first China showroom and we were late. So we couldn't get product in. So instead of opening the showroom, we decided to do a yoga class. So we didn't have any product to sell, but we had a lot of really, really excited people. So we did a yoga class and 700 people showed up for our yoga class and we didn't sell any products. So we have opened that showroom and it's doing fantastic. They were absolutely ready for us. I was telling someone the story last night. I was doing a yoga class in Shanghai and I don't know if I knew where the yoga was in the market and the class is packed. It was one of the best classes I've ever done. The teacher was amazing. And I looked around and the women were wearing big shirts and men's pants. And I was I just had this feeling of, oh, we need a store so bad. They need our products. And I just got so excited about the potential for us across Asia and Europe. One of the big things that is really important with our showroom strategy especially for international is as we go into some of these new markets, the real estate can be very tricky. So if you look at Hong Kong, it has some of the highest rent in the world. So when we think about our showroom strategy and really understanding real estate and understanding the market before we go, it's so important for us to get this right and have a beautiful store at the right place at the right time. So this showroom study really supports making the right decisions in real estate. So the second focus for us is love our people, love our guests. So I know that many of you, I would assume actually all of you have been to our store. There's something different that happens there. It could be the incredibly healthy, beautiful woman that educates you on the pair of pants that she's wearing or it may be that stud in the men's section that shows you his big muscles in his metal vent tech. But there's something different going on and it's all about our people. This is our advantage. These are the people on the ground that inspire us every day to be better as a company. It's still why I'm here. I go to the stores and I'm so inspired by the people that I meet. I'm so inspired by what they set in their goals and the vision that they have for their life and what they share with their communities. One of our big pieces in loving our people and it may sound a bit weird, but it's we call it the entrepreneurial manager. This is so critical for us in our growth because we hire smart thinkers as store managers that want to run big businesses. So the mistakes that I see over and over is that we get this big head office with big smart people and we take all the decisions away from the stores. So then they just become doers. If we fall into that trap, what we'll end up having is a store manager that doesn't know how to grow her business from a $4,000,000 store to a $6,000,000 store. It's so critical that we continue to push them as entrepreneurs and as thinkers so that they can continue to build the business in a whole new way that we could never do from here. So I believe we have the best retail managers in the world. They're running huge businesses and they're comping every year into numbers we never thought possible. We pay our managers on performance and it's so important that when they win, we win. So they're paid on performance. So they're driven by being successful and bringing Lululemon to new guests. One of our I was interviewing a regional manager and I don't ever forget how important the entrepreneurial manager is. And I was interviewing this regional manager and I asked her why she was leaving. She was leaving a really, really great retail company. And I said, why would you leave your job and come to Lululemon? And she said, it may sound crazy, it's because you let your store managers own their budget. And she's like, I want to work for a company that we get to make decisions. I don't want to be told what to do all the time. I want to create it. So that is so critical in our growth and making those managers big, big entrepreneurs. The other piece that we're obviously super focused on is our educator, our educator experience. They're on the ground. They're the closest one to the guest. We love our educator and I ask myself every day, everything that we're doing, is this going to enhance the educator experience or does it take away from an educator experience? There also, we also compensate them on performance as well. So they have team goals that they're all so excited about achieving. And our educator pay is groundbreaking in how we're actually taking it to the next level of over top of other retailers. The second big piece of loving our people and loving our guests is a decentralized and local experience. So the I don't think anyone does this. So I'm almost embarrassed that this is what we do. But this is what we do. So we have those communicators that know the market so well. They are incorporated in everything that we do. We listen to them constantly. So an example of this is right from the beginning when we're about to sign a lease in the real estate, those community connectors have already given their feedback on exactly where they think the store should be and whether or not it's exactly where Ocean and Duke are shopping. And then we go beyond that. We go beyond that because we incorporate them in the store design process. So they actually give us feedback on what the aesthetic is. So if you actually go to Westchester Mall, it's like a very elegant guest. We wanted a lot of gold and very sophisticated look to it. When you went to we went to Calgary and we have a bowl on our storefront because they're cowboys and they're very proud of it. So every single one of our markets, we create a local experience, whether it be through our storefront, sometimes it shows up in our water features, sometimes it shows up just in our walls, but we're creating that experience. So it's 1 store, 300 times, not 300 stores. There's a big difference so that when we open that store, our communities are so proud because we built it for them. And it comes from those original, very cool community connectors that tell us what to do. So we don't come from a place here of knowing it all. We listen to the people out there and we create something that they're all in love with. So the last one in loving our people is our people magic. So like I said, there's something very different going on in our stores. There's something very beautiful going on in our stores. When we look at the reasons why our people join Lululemon, the number one reason is always our product, which is incredible. They're obsessed with technical beauty and they come to work for Lululemon to wear it and to be proud of it. But a big part of our loving our people is we know that when our people are happy, our guests are happy. So when we have a year like last year, it takes a little step back for us because it was really hard on our people on the front lines. Big part of what we talk about is ensuring that those educators on the floor understand what's going on with the company. We over communicate, so they really know what's happening in the company and they can still feel proud and know that we have not lost the core value of quality. It's critical to our growth and they're such a big part of that. One of the other things that we do and I'm sure you've heard is it's called vision and goals. It may sound simple, but we train our educators to write goals. They have health, career and personal goals. And then our managers are trained to goal coach them and then in turn we actually share that with our communities. We've done millions of goal coaching sessions with our communities around the world and with every educator that works for our company. And what that does, it allows them to love their life. They may have goals within the company. They may have goals outside of the company. They may want to be the next regional manager. They might want to be Laurent. We support them in writing those goals and then we support them in making it happen in their lives. This is keeping our educators so engaged and it's a big part of what we do in the stores. The last, the third thing focus for us, Lululemon anywhere, anytime, our vertical advantage. So the first thing I would talk about is that we have an advantage that we are incredible educators. So our educators can come in, you come into the store and they're going to tell you all about the function, the features of our products. It would be so sad if the design team spends all this time creating this beautiful product and then nobody gets to hear about it. So we talk about education all the time. So giving our guests really what is our product all about. So we know a huge focus for us is to enhance this experience. So technology, there's so many different things that we could do, but we're not going to just put technology in the store to have technology in the store. The technology has to be to enhance the education of our product. So a few things that we're trying in this space is you'll see at our new Robson flagship location that we're actually going to have a digital pant wall. What's super cool about this is that we're actually able to show the product in motion. So if it's the Run and Inspire crop, we can show someone wearing the crop. So we can see how the product is performing. So this will be the first piece for us. It's so much better than actually having it on a mannequin. So we've been testing it and then we're going in our new flagship. There's other things that we're looking at within the store. There might be an iPad dock that you could put a product in front of it and it could show the education of that product. One way we tested it was with one of our scarves, which there's 5 different ways to wear it. So we had it actually close to the scarf and it was playing a video of all the different ways in which you could wear the scarf so that we can enhance that experience and she just can walk by and see how that scarf is worn on an actual person. The second big thing is what we call a simplified experience. So creating a personalized relevant experience for our guests that ultimately saves time for him or for her. So that means that when we send out a product notification to you and it's Duke, we don't send the women's product and then the men's is tucked underneath. It means sending out a product notification that speaks to you, so that we're actually giving you what you want to see versus just the same to everyone. So being able to personalize the experience that people are having. So what does that look like? It looks like for us that we want to be able to give our guests choice and be able to see the way that he or she wants to see it. One of the things that is so critical in the personalized experience is guest profile. So we need to get a database that has all the profile of our people so that when Mother's Day comes up, we can actually see our guest profile, know what size she wears and our educators can help get exactly what it is when it's a gift when he comes in the store looking for what she wears. There is so much we could do with guest profile and so much we can do so that we can actually enhance your experience. The big part of a personalized relevant experience is also our assortment. So our goal with our product team is to create a localized assortment. So when you're in Florida, we have an assortment that is makes sense for your hot market or if you're in some of our very, very cold Canadian cities or maybe Chicago, we have a cold assortment that makes sense for you. But ultimately, we're able to order the full line on our e commerce site. So we are relevant. We're saving her time. We're giving her and him what he needs. And then we have our online assortment that will actually fulfill all their needs, whether it's going on a holiday or a travel trip. So the guest profile is critical in terms of where we're going. The last piece of this is seamless integration. So you may have heard of it as omnichannel. I heard someone say last night it's the most overused annoying word. So we call it 1 guest. So our 1 guest initiative is about integrating e commerce and stores. So you'll meet Paul later today. Paul Zengel is our Head of U. S. He actually comes from digital e commerce world and the balance of the 2 of us store world, e com world, we brought the teams together. So we've integrated into one channel. So what does that look like? You might have heard over Q4 that we gave devices for 55 of our stores where they could order product online in store. So in next quarter, every store will have that device. We've tested it. We know what didn't work and what's working. And every store will have that device so that they will be able to go online at any point and order for our guests. What's critical in this is the guest profiling piece because we can once we have all of the profile, it will be such a seamless beautiful experience for our guests and so quick to be able to do. What does it look long term? It should be that you order you buy one thing in store, you buy one thing online and it comes up as one transaction. So everything that we're creating, our guests should never know where the inventory is, what pool it's coming from, who sold it. It should be seamless for our guests. So we also tested that our store managers now are being compensated on e commerce sales, which is a huge unlock for them and really integrating those channels. The big piece in Lululemon Anywhere Anytime is us maximizing our vertical advantage. So it's the education, it's the experience, it's being able to teach our guests about vision and goals, the touch points that we have. It's building a deeper relationship with our guests at every touch point that we have. So in closing, I think Lululemon is pretty special. After 12 years, every day I get up really proud of what we not only what we created, but what we're also creating for the future. We live into new possibilities every day. We have a team here that doesn't see the world in constraints. They see it through the eyes of what else is possible. And Laurent spoke to that. It's part of our DNA. It's who we are. So what you can count on us for is we will open the best store at the right time and create a very unique experience for our guests. We will hire incredible people that love our company and love our product. We will always build authentic relationships wherever we go and have people on the ground, our community connectors that are sharing the brand with the world. We will always open showrooms so that we can make more friends and see more markets. We will treat and pay our people, our managers and our educators, our store people best in class and we will train them to be big thinkers and big entrepreneurs. We are always going to be obsessed with our guests. We will push new innovations and provide a very, very unique, the best guest experience. With all of the new things that we're doing within technology, we will maximize our vertical advantage through all of our OneGuest initiatives and we are one retail team with one vision and it all goes back to our guests and our educators. Thank you. And Laura is Laura Clouberg. Good morning, everyone. I'm the closer. The only thing that stands between you and lunch, so we'll sort of jump right into it. Just to tell you a little bit about myself, I joined Lululemon 2 years ago after a pretty long career with Unilever. They're the maker of big global brands like Dove and Axe and Lipton Tea. And what I really wanted to share with you today is why I think I have the best job in the world. And it's not because I get to ride my bike to work every day, which is really pretty special after having been on the London tube for 3 years and the New York subway. So getting on my little bike every morning and looking at the mountains and the water is pretty special. I think this is just a great story to share about the brand Lululemon. So when I joined Lululemon and the news kind of spread in the circle of former colleagues, business associates and friends, I probably received about 100 notes, personal notes that people wrote me and it was all to tell me about their personal experience with the Lululemon brand. I've never witnessed such brand love on any brand that I've ever been associated with my career. And these were people's personal stories about the brand, their stories about their experience with our athletic apparel when they were working out, And they would name their favorite store, the store that they always shopped in and even name their favorite Lululemon people, which really speaks to I think what Delaney was just talking about. And I must have had 100 notes like that. It was really it actually really just blew my mind. And I really think that there are very few brands that can really engender such passion and such brand love. And what really blew my mind was after coming from a career of really spending 25 plus years in very classic traditional marketing and managing a global advertising budget of over 2,000,000,000 dollars that all of this was built by just a couple of things, which is obviously having really great beautiful product, but really being built by word-of-mouth, personal experiences with the brand and our people like these really special relationships. And what I can tell you is that is the envy of all big global brands. All big global brands that have huge advertising budgets would absolutely kill to create what Lululemon has created. And that's why the social space is exploding, right? Brands are diving into the social space in a really big way and that's why brands like Dove have shifted a lot of their investment into creating content that they hope will resonate with their consumers all around the world, right? So for those of you that saw that sketches campaign that they did about 6 months ago, like they got like 62,000,000 views just on YouTube by doing that. And it's all in the attempt to create content that's real and personal and that people will share. And when I look at what's been created by Lululemon, it's just awesome. Really what I think the learning is and that's what all big brands crave is that the power of a personal recommendation and it's super simple. Power of a personal recommendation, the power of a yoga teacher recommending your product is so much more powerful than a television ad or a print ad. Just think about it, who do you rely on for advice on what to buy, what skincare products to buy, what athletic apparel to use. You go to the people that you trust. And I think one of the things about Lululemon is that we have really developed a level of trust that's really unparalleled. So my question is how do we evolve and innovate to build brand love? So let's just like jump into the presentation where I think I can give you some insight in how we are doing this. Laurent spoke earlier about our ambassador relationships and they really are the foundation of our work in about 2 70 communities, so all the communities where we have stores. And I just featured 3 here just to give you a flavor of who these people are. So the woman in the bottom right corner and some of you from New York may recognize her, this is Taryn Toomey. Taryn is a yoga teacher and she actually teaches a class called The Class, which is a killer workout and she's blended yoga with other fitness regimens. And she actually charges $40 per class and she has a waitlist all the time. Anybody out there taking her class? No. Okay, you need to get on that. And what we did just a couple of weeks ago, Ted came to Vancouver and we brought Taryn to Vancouver and we gave her the opportunity to teach her class to a bunch of TED participants. And she really kicked some butt, it was really great. The next person you see in the big photo is Dan Wells and Dan Wells is a world class CrossFit athlete. He's Head Coach at CrossFit Horsepower in LA. He is like the go to guy in Studio City. We've had a really wonderful relationship with Dan. And then the top right ambassador, she is what we call an elite ambassador. This is Jamie Anderson and Jamie Anderson for those of you that followed snowboarding during the Sochi Olympics, she won the gold for the U. S. For Slopestyle. We've had a relationship with her for about 3 years. She's an avid yoga practitioner and she really credits yoga for her ability to perform under lots of stress and tension. And what was really great in Sochi, a couple of our folks were on the ground in Sochi and we invited her to the Lululemon House and it was like a refuge for her. She can come and practice yoga there and really just escape the craziness of the village. So just to give you a flavor for who these ambassadors are. And what I would say is that the program itself is really about discovering new athletes in all our communities who are really up to great things and new things like fitness is evolving so much, it's become so much more social. So we want to always be on the cutting edge of what's happening in fitness. And what do we do with these ambassadors? We support them by we give them teaching slots in our in store yoga classes. We actually refer many of our guests to their classes and what we find in many of our stores is that if you're traveling and you want to know where to go for whatever type of physical pursuit you're looking for, all you need to do is go to the Lululemon store and ask our educators and they'll tell you where to go, because they're in the know. So that's our ambassadors. And we leverage these ambassadors and we work with these ambassadors to help create really beautiful and really memorable brand experiences. With about anywhere between 900 and 1000 ambassadors, these experiences they help us bring them to life. So what works in New York is actually going to be very different than what works in Nashville, which is going to be really different than what works in Calgary and what works in Hong Kong. And the other interesting thing is that what we did last year and it could have been incredibly successful, we may not even repeat it and do it again. And one of the big learnings for me in coming to Lululemon was that was like totally the antithesis of everything I learned growing up in marketing, right. I learned about best practice. And so if it works in Germany, let's do it in the Netherlands, let's do it in the U. S, let's do it in Brazil, it will probably work and in fact it did. Here we call it lazy marketing. I was like, I think Delaney was the one that said that to me. And really the reason is we are constantly driving innovation to really create what's fresh, what's new and what's never been done before. I had the opportunity yesterday to sit with my VP of Community to look at a bunch of really brilliant never been done before brand experiences that she wants to create in a number of cities around North America, really, really exciting stuff. So just to give you a view on these, some of you may have even ran in the seaweeds. Seaweeds is a half marathon. We first created in 2012. We ran it again in 2013. We had over 10,000 runners. It is an amazing experience for the entire weekend. Everyone who participates tells us it's the best race they participated in by far. It galvanizes everybody in this building. We had over 40 runners just come from Austin alone that participated in our Run Club in Austin and we see that with many of our stores. The Run Clubs in many of our stores get groups of people together and they all come to participate in that for the weekend. When we posted registration for SiWi's 2014 on our website in January, we sold out in less than an hour and we think that we could have sold actually 25,000 slots, so pretty awesome. The top right is pretty cool. I think we need to do this despite what I just said that we don't repeat things in other markets on the Brooklyn Bridge. I think that would be very cool, but we took over the Andy Warhol 7th Street Bridge in Pittsburgh and we got 750 yogis to show up and this was all in support of a not for profit in Pittsburgh called Knit The Bridge, which is a grassroots community art installation, just super cool. Who's ever done yoga on a bridge? Wonderful, wonderful event. And then the bottom right, you may have heard about this before, but what does it take to get guys to do yoga really? Well that was it. So the opportunity to get on Wrigley Field attracted so many men to this event. We did it in 2012 and then we repeated it actually a bigger and changed the event somewhat in 2013 and in 2012 we had 10,000 people and in 2013 we had 1500, super cool event and a lot of men that we hadn't actually brought into the brand before. So if you just sort of multiply these three events times 2 70 communities times multiple experiences throughout the year that's really what we're talking about in terms of creating brand experiences. So we still create massive yoga events. We're still doing that. I'm going to talk about a few later in the presentation. But we try to always strive for to find new and surprising venues. Like doing yoga on a bridge is kind of cool. I'd like to do it on the Golden Gate Bridge, so that's in my goals. Last summer alone we brought about 200,000 people to their mats, but we're also innovating in other experiences. So I'll just share a couple of those with you. In LA we started doing something which was pretty like grassroots, underground, not heavily advertised or talked about called Dress to Sweat. And what we do is we tell people just show up to Sweat. So come dressed to sweat. The first pillar that you saw in Felix's presentation. So come ready to sweat and then you have no idea what you're going to be doing. So you could be lifting tires for an hour. You could be playing dodgeball. You could be doing yoga in a CrossFit class. You have no idea. So the element of sort of surprise is just really fun and it creates like a lot of positive tension. We also did something really interesting and this was really focused a bit more on men's community, but we created a CrossFit meets yoga competition in an airplane hangar in Montreal. And we had a huge turnout, really, really successful event. And then we did something just about a month ago around the NBA All Star Game. We had a we called it the NBA Yoga Jam. It was basically yoga meets music. And just a super and again leveraging being in New Orleans, it was just like a fantastic event. So it's always really about trying to innovate and bring newness and freshness to whatever it is that we're doing. So now we're going to just talk about how we create content that inspires and educates and actually challenges our guests and they love to participate. So not only do we build these experiences offline, but we build them online and then we amplify them online as well. So we have a really passionate community online around Lululemon. So just in 2013, we had about 4,000,000 people that participate in some way in our social channels. We also created a site called Hey Lululemon, which is actually our own site, of which we had about 300,000 people visit that last year. And it really gives our guests an inside look at the brand. We have designer interviews where it enables our guests to really get like up close and personal and to really get a feeling for some of the people that you saw in some of these videos. And in fact the Fast Turn team has participated in a lot of that. The conversation on Hey Lululemon, it's often around can't you bring back that favorite jacket or those favorite pants I bought in 2010. That tends to be like the number one thing that people always ask for. And then there's a lot of just really good conversation around guest questions and even suggestions for our products. So when you go in our stores and you see we have sort of our suggestion board in the fit area, we get those online as well. In 2013, we had about 3,000,000 people visit our blog. And if you're interested in health and wellness, I would urge you to read it if you haven't. We've refreshed the content a lot more than we had in the past and we're tracking well ahead of that so far in the Q1 of 2014. And I think that's because the content is super fresh and it's really lifestyle based content. So while we do certainly talk about product and how to wear it, we also provide a lot of other content that is really relevant to the Lululemon guest and the Lululemon lifestyle. And then lastly, we're also partnering with a couple of third parties to actually bring in new guests that maybe haven't been exposed to the brand before, whether that's Pinterest and Lululemon quite frankly is like a perfect fit with Pinterest because that's where guests pin the things they're passionate about and what they love. So Pinterest, Walnela, which is also a curated shopping site, which is also really terrific and the greatest which is a health and wellness blog. So Delaney touched on this a bit. I think one of the pieces of magic about Lululemon is that we are really a local brand, right. And the reason we are so local is that we have people that are on the ground that we listen to. She talked about our community connectors and they help tell us what the community is up to, what the conversations are in the community, what people are talking about, what does that community care about. Nashville cares about something probably very different from New York City. And what was really eye opening for me coming from my background is that sitting here in Vancouver, I can't possibly know what's relevant in Miami. I really can't, right? But our stores know. Our stores know exactly what's relevant and happening in that community. And so just to take you through a couple of examples which I think they're great. Is anyone from Seattle in the room? So the top right, you guys probably get it. I don't know if everybody else does, but this is in the lead up to the Super Bowl. And our store in the Alderwood Mall put this window in. So it's dressed in the colors of the Seahawks. They put the number 12 in there, which everyone in Seattle knows what that means. And it really just created lots of talkability and lots of buzz in the community and there's just a lot of enthusiasm around that. The bottom right was in one of our stores in Edmonton and was really speaking to the hockey community there who are just like avid hockey fans. Hockey butt is back, which was really just like a fun window. And then what's really beautiful is this right here, this big photo, you can't really tell, but that is an art installation in one of our Toronto stores. So in Toronto our guest goes to the Lake District all summer. So every summer everyone leaves Toronto and they go up to the Lake District. And we made a map of the Lake District out of yoga mats and we have that on display in the store. So it's really beautiful and guests can really appreciate it. So this decentralized brand approach which was really foreign to me before I came here really enables us to show up in a super relevant way in every community that we're in. And I really can't think of another brand that would trust the guardianship of its brands to 2 70 store managers. I mean when I got here I was like we do what? And actually what I can tell you is it really works. It is powerful. So sharing our story, we love to share the Lululemon story and I think actually we can do an even bigger job of doing that in 2014 and that's our plan. But our guests love the opportunity to engage with our content whenever they can. So these are just three examples that illustrate that. So the top one is called the Sweatlife and when we posted that challenge out there, we received about 10,000 photos of our guests sweating. I mean the response was amazing. The top right is no humbug and some of you may have heard about no humbug. No humbug was something that we kicked off around the holidays in December. And we it started out strictly as a social idea, but we found that our stores were so excited about it. So we said, okay, let's enroll everyone. And one Delaney talked a little bit about our vertical model. One of the things I think is such a huge advantage for Lululemon is we have basically a 5,000 person activation army on the ground. And everyone in our stores loves to engage and get behind these types of programs. So No Humba, basically what we did is we gave every store a small budget and we gave our social moderation team a budget and they were they basically just could create random acts of kindness in any kind of interactions that they had with guests or not even guests. So I can just share a couple of stories with you. So one is as simple as buying the person in front of you and paying it forward and buying their Starbucks coffee for them. That's a simple one. We had one guest in one of our stores at the pant wall talking to some of our educators and she was sharing the fact that her daughter couldn't come home for the holidays because she couldn't afford to. We bought her daughter a plane ticket home. It was awesome. Another great story is there was a coffee shop around the corner from one of our stores and our educators frequented that coffee shop all the time and it really was in need of repair, it was really tired, it was really worn. They schemed with the people that worked in the store when the coffee shop owner went home that night, they all went to the coffee shop, they brought cans of paint, they painted, really basically did extreme makeover for this coffee shop and when the owner of the shop walked in the morning, it was like totally transformed. So those are just some small examples, but I could go on and on the examples were incredible. And then the last one we just did, this is like it was called if nothing. If nothing stood in your way what would you do? This kind of took us by surprise. We thought it was a cool idea, but the way our guests reacted to it, it was just awesome. So we had over 1,000 people submit videos and photos of what they would do. And so my 2 personal favorites were make out on the top of the Eiffel Tower which I've already done. And the one that I really loved was to travel through Norway on a dog sled. Now that one I would love to do. So really exciting. Okay, so anybody know about Jimmy Kimmel, what happened with Jimmy Kimmel a couple of weeks ago? Okay, so this is great to talk about. One of the points I'd love to make about Lululemon is that we are so nimble. It is really, really hard for big brands to be nimble in the social space because you have to respond in the moment otherwise the moment leaves and the guest is on to something new. So you have to be there, you have to be dialed, you have to be ready to respond. So about 2 weeks ago, I came into the office in the morning, I was right there walking to my office and my digital brand director comes over to me and says, okay, this is what we want to do. I didn't even know what happened. So the night before Jimmy Kimmel did a skit on spray on yoga pants and it was from Lululemon, the whole thing. He took a can of pledge, labeled it Lululemon, it was very funny. So everyone said we have to respond like we can't just like sit, we have to respond. So within a couple of hours Laurent was totally on board. They created what we call a PDP, product detail page that probably looks really familiar to you. We posted it up on the website. We said it was $1200 a pair because you get lots of use out of them and that it was out of stock. And what happened was Jimmy Kimmel then retweeted what we had done. He has 4,000,000 followers. So we brought in I think 100,000 people ended up seeing this just from this one thing, but we turned on a dime. So by the end of that day it was up, they were retweeting. There are very few brands that can do that, that can react that quickly. In my old life, I would have taken us at least a month. I would have had to get a 1,000,000 approvals. It would never have happened. And what was even greater was that our stores in LA and New York ran out, bought cans of pledge, labeled them Lululemon spray on yoga pants and created windows around that which happened the very next day. And so again that I think speaks to the power of this vertical retail model that we're operating in. The top right, that's Lasha Dallimore. She actually works on my team in the digital space. And this is a little bit of an older example. This is 2 years old. Some of you may have seen this video. It was called, Shit Yogi Say. And we did this during the time when there were all the shit memes, shit people say memes that you probably are familiar with. The power of this was that it was conceived, written, acted out, she acted in it, edited and posted on YouTube in about 4 hours. It just doesn't happen. It's very difficult for brands to operate the way Lululemon has been operating. So looking ahead, I want to just share with you directionally some things that I think are important for you to know and some of them I think people have talked about already, but just to give you a feel for where we're headed. So Felix referenced this, I believe Laurent referenced this. This is about the mindful athlete and it's not just the territory of men, it's the territory of women as well. So Lululemon is rooted in yoga and the values of yoga are at the core of how we need to evolve as a brand. But we know that our guests practice yoga and they practice many other fitness regimens whether it's running, Pilates, CrossFit, TRX, bar method etcetera. We know that today's athlete is really self aware and really aspires to live a really well rounded balanced healthy lifestyle and chooses training regimens that will reinforce things like flexibility and strength and endurance and focus. So we believe that our opportunity is to really own the mindful athlete space. We think it's the intelligent approach to modern living and to fitness and to really living an overall healthy lifestyle. It's really about integrating both body and mind. And I believe that only Lululemon really has earned the right to claim that space. It's really consistent with our heritage and our values. Felix talked about elevating the men's experience through absolutely beautiful technical product, but we also plan to do this through a much more tailored online experience. So if you're a guy and you come to our website right now, often you'll see just a woman in a yoga pose. I'm not sure we're really speaking to our guy today. We are looking at creating social channels that are actually just for him, personalized emails that are just for him. And then with regards to community, we believe that yoga only events are not the way to attract the guy that Felix talked about earlier this morning. So we're really building community by getting product in the hands of the right guys. And what's the beauty of Lululemon is our stores know on a local level who those right guys are. So if I were you guys, I'd be in our stores raising your hand. And the event that I talked about earlier, the Montreal CrossFit event that we did, that was like super successful event and so we're looking to create a lot more events like that. We're also planning to make it personal for her. So Delaney talked about this a bit. So how do we build a seamless guest experience for her? How do we serve up personalized content that's much more relevant for her? So if I'm a runner and I live in Miami and it's January, I probably want to see different content than if I'm a Yogi and I live in Toronto in January. I don't know if I care about a down puppy vest if I'm living in Miami. So it's really about creating a much more personalized message and serving up content to our guests. Our emails today have among the highest open and click through rates in the industry. I mean so ahead of traditional retail benchmarks. So you can only imagine when we really create this personalized content how they'll perform even better. So more to come later in the year on that. Diane talked about this and so did Tara, inspiring athletic style. This is really we're going back to our roots making technical product that's absolutely beautiful, beautiful and feminine and expanding on the success of our EnGo line. We really were the leaders or have been the leaders in the athletic style movement. It was all over the spring 2014 runways and we will be doing a lot more in this space especially in social and in our own channels to help our guests understand how to style their apparel and how to really move from morning to evening. This is really important. This is Britt and Britt works in my team. She is our online educator. This is really about humanizing the brand and ensuring that our brand voice is real and human. And we will speak to our guests with integrity and humility and what we've launched is a bunch of a series of videos called Ask Brit, where Brit actually responds to real questions from guests in a really authentic and real way. She sits right out there. I told her this morning when she came in I was talking about her, she had no idea. It's been a really effective communication tool for us so far and our guests have responded really well to this very candid approach. So beyond our F Brit series, we will share what we're up to much more broadly and what our ambassadors are up to and you'll see a little bit more about that as we move on. Going global, so as you know we just opened our first store in London in Covent Garden and I lived there for the 3 years prior to coming to Lululemon and I'm often asked by former colleagues like, do you think you're really going to be able to expand the brand globally using the same strategy that's worked for you in North America? And my answer is like unequivocally, yes. The formula works. I've seen it in action. The desire to live a healthier life, it exists everywhere in North America and it exists everywhere in the world. It's not the domain of North America. What I've seen in London is that we were able to find these amazing ambassadors from the best studios and the best gyms and we've even have an ambassador in our new store from Barry's Boot Camp. And what was funny when I was over there a couple of weeks ago, a bunch of educators were telling me how they had seen Beckham. There were a lot of Beckham sightings at Barry's Boot Camp and unfortunately I missed all of those. So I guess my timing was just bad. Local talent, we recruit local talent for the store and quite frankly they are no different than the talent we have in any of our stores. I could go to a Cincinnati store, a Boston store and I could go to the London store and you will see the talent, our talent, our people, our educators, they're the same. They just have gorgeous English accents in our Covent Garden store, but they're basically the same and I was sharing this with one of you earlier that we have a managers conference every summer and last year we brought some of the team from Asia and some of the team from London and Europe. And what struck me was how much they felt like Lululemon. It was no different, like everyone just speaks different languages, But like Lululemon DNA, whatever it is we do to find the people that share this, it was just so powerful. And I was chatting with our community connector from the Netherlands and she said to me, Amsterdam really needs Lululemon, like people of Amsterdam need Lululemon. So this is absolutely no qualms at all. This for me is absolutely going to work everywhere that we go and of course we'll have to adjust for local nuances and we know that. And the great thing about Lululemon is we listen to our educators. So if we have local educators telling us something won't work, we listen. We don't make decisions from Vancouver, we listen. Some said that we couldn't get Londoners to show up for a mass yoga event. I heard that over and over again from friends. On the left there, you see what we did. This is about a month ago in March. We created this absolutely inspiring event at the Royal Opera House. We had a live orchestra and we had about 780 people show up. And it was standing room only, we had to close the door. We could not admit everybody that wanted to participate. We also did something called Cheeky Yoga where we gave the City of London free yoga on one day at any of the 16 participating studios that we have relationships with. It was sold out. It was incredible. And my friends tell me that we're beginning to see our iconic manifesto shopping bags on the tube and to me that is a sign of building the brand. And if anybody travels in New York too, New York subways you see them all the time. So I think with regard to global expansion, the beauty of Lululemon is that while we are a Vancouver based brand, we show up local wherever we go. So there is this huge sensitivity to the local market. So in the end it's really about continuing to build brand love. And what I'd like to close with is just to say that we stand for so much more than just black stretch pants. That's what many people think we stand for. There was a great quote in the London Sunday Times about a week ago and it put it this way. It said, Lulu is not about expensive yoga pants. It said that Lulu is actually about tension, energy, balance and making a higher impact in the world. And I thought that was really great to see that The London Times is writing that about us already. So I've really tried to convey in words and pictures what we mean when we say community. I really believe it is our differentiator. Relationships cannot be copied readily and it really is our secret sauce. Brand building is not a sprint, it really is a marathon and we're going to go to the video and you're about to see why. Thank you. Well, community is our biggest differentiator as us as a brand and it's broken down into really 3 core components. So we're decentralized, we're local and we're built on the foundation of relationships. So when we go into a new market, we go in with a showroom, we relationships. So when we go into a new market, we go in with a showroom, we build relationships with the local fitness influencers, we get to know where the cool places are to sweat, where the cool places are to eat, we hear what the current community conversation is and who we need to be for that community. From there, we open a store where we continue these relationships. So we do that online and offline. Each store has their own Facebook page where they're interacting with their community and it's really built out a store community board. So our educators and our guests are able to log on and see what's going on in the community, what is happening at the local studios and what's the new product that's coming into stores. So instead of just recreating the same thing, we look at what worked in the past and say that was great and then pull pieces from it and then hear what the current conversation is. If we created the same thing in Quebec that we created in New York, the model wouldn't work. And we work with our ambassadors to figure out what are their dreams and what are their goals that they see. Chris McClung, who is an Austin, Texas ambassador, he works with underprivileged youth and has built a program so they can reach their goal of running a marathon. And by working with us, we were able to give him the META grant which allowed him to have his dream come to life. My name is Erica Banda. My name is Lorena Banda. Monica Matias. Charles Wilson. Kahindam Sangira. It's Eric Garcia. Marathon High is a program that we at Rogue started 2 years ago. The idea is that we get middle schoolers and high schoolers to train for the Austin Half Marathon and Marathon over a period of about 5 months. I started off running, like, 2 miles, and now I just ran 26.2 miles, which didn't think I was capable of, and I just think my self confidence has gone up. It felt great. I'm so proud of myself. I was like a superstar. So, no, I was really happy. And I feel like I'm more in tune with my body, so it's easier for me to get along with other people. I signed up for a marathon because throughout my life, I've always lived with so much doubt, and I want to prove to myself that, and I'm capable of so much more. The most important thing in our community program is relationships. Everything that we do is founded in a wonderful relationship and a real relationship. That is one example of what we get to do on a daily basis and what our stores are up to every single day in 2 71 stores around the world and it's why I get up every morning and come to work at Lululemon. So that concludes our that concludes the formal presentations and I know you're all getting restless and hungry. So don't worry we will take a short break. Then we're going to come back after that break and we'll have quite a lengthy opportunity for Q and A with the full panel of the management team and some tours of portions of the building. So take a break now about 20 minutes let's come back at say 10 to 12. Take a bio break, make phone calls. We have a box lunch for you outside. And if you could grab that maybe bring it back and eat as we go into Q and A and we'll try to get started at 10 to 12. Thanks. If I could get everybody to take your seats, we'll get started again. And if I could ask the management team to come up on stage. Hopefully, there's enough chairs. Missing a couple of key people. If I could get the rest of the management team. So the next part of the day, we've got lots of time set aside for Q and A. Laurent will be here for the first part of the Q and A. And then we're going to have small groups that will go on tours of our white space R and D facility that will be led by Doctor. Tom Waller, who heads up our white space group. And Laurent will be accompanying you in those smaller groups so that as you tour through you also get some small group time with Laurent. When we get to that point we'll let you know you all have either A, B, C, D or E on your name tags. So we'll go in those groups. So we'll call you in order. As I said, we'll give you a warning when Laurent is going to leave the Q and A. So load them up at the start. I think before we get going, there's 3 additional members of our management team who didn't present this morning. And I'd like them to just spend a minute or 2 introducing themselves, Steve Barroube, Alan Smith and Paul Zengel. Welcome. My name is Steve Ruby. I am SVP responsible for our global distribution. We have 6 distribution centers around the world, also our logistics. I'm new to the team. I've been here for 8 months now and it's been the best 8 months of my career, I will say. Before that, I spent 22 years on the East Coast in the U. S. I worked for Cole Haan, the Cole Haan brand for a long time and I started my Nike my career back in 1990 with Nike. So I've held a variety of different positions within operations and supply chain with the Cohan and Nike's brand. Nice to meet you. Hi. I'm Alan Smith. I'm CIO and I have a responsibility for all IT, technology, retail, e commerce, supply chain systems, all the things that make the engine and guest experience work. I've been here about 3.5 years. Before that, I was at Gap for about 12 years and then before that about 15 years down in the valley doing a bunch of different technology things. And it's just amazing to be up here and working on things like one guest experience, which really from a technology foundation perspective is just going to be such a game changer. And having the ability to apply all the things that I've learned over those 28 years to building this brand is just amazing. So again, welcome. And I'm Paul Zengel. For those of you I haven't met, I joined 2 years ago and was brought on board to run global e commerce and since then have gone through the transition that Delaney talked about in combining the channels and now I run the U. S. Stores and e commerce. I also took on Aviva as I was on boarding which has been an adventure and you heard about that from Terra today. Super exciting to see the growth there. My history, I've been in apparel for about 15 years. I helped launch Ralph Lauren into the digital space back in 2000 and I was there for a long time in New York and then I went to Columbia Sportspire in 2008 and did the same thing before I came here. Happy to be here. Love working and sweating with these people on stage. Okay. So before we hand it over to you for questions, every quarter after we have our earnings release, there seems to always be 1 or 2 topics that we realize, oh, that's really confused somebody or every meeting I have, I have to answer the same question. So before we send it over to you, I thought that we'll just cover 2 topics that when I was marketing in New York a couple of weeks ago, I think every meeting had these same questions. So the first is new store productivity. Okay. So in honor of David Letterman's announced retirement, I'm going to do a top 10. Now, okay, number 10 adding mistakes. I confess I didn't have 10, so I had to throw that in there. Number 9, okay, I only had 8, so more adding mistakes just to flesh out the top 10. But now getting into the real ones. And again, I know all of you try to take our 10 Q and 10 ks information and try to back into new store productivity. I talk about it because I have the precise numbers. But when you're coming at it from big picture to try to narrow it down, there's just a lot of mistakes that can be made. So what I'm trying to do here is not tell you how to do your model, but tell you what to watch for and think about and probably you'll find all the information to refine the model a bit more. So number 8, failure to consider seasonality in analyzing new store productivity. So of course Q4 is a little bit of a bigger quarter. Sometimes we find people will take Q4 and multiply by 4 and it throws you off. Number 7, and this is behind us other than for Q4. If you don't factor in the fact that the previous year had a 53rd week, it'll throw off your calculation. Number 6, inaccurate guesstimate of new store square footage. If you simply assume that every new store is, let's say, 3,000 square feet, it's going to put you off maybe 5% or 10% in either direction. So just watch for that. Number 5, inaccurate guesstimate of exact timing in new store openings. I remember it's maybe 1.5 years or so ago, we had a lot of new stores opened in a quarter and I think everybody assumed that they all on average opened in the middle of the quarter. And in fact it was I think later in the quarter and it really threw off some of your estimates. If you go to our website you can actually get the dates of each store opening. Number 4, incorrect treatment of stores while under renovation. So while the store is being renovated and we're renovating how many stores a year? Maybe 30? Maybe as many as 30? No, I don't know. Yes. So while they're under construction, of course, we take them out of the comp base and back them out of last year. So again, if you're thinking about that, you can adjust your models for that. Number 3, failure to adjust for existing stores expanded or relocated and therefore excluded from comp base. So if we relocate a store or even expand it in place by more than 20%, I don't talk about it as a new store, but in fact we take it out of the comp base because it is significantly different. And that's fairly common and I think most companies probably do that. But unless you're watching for that, again it'll throw off your calculation. Number 2, and this will be relevant for this year, confusion due to new Aviva or Australia stores because those are at lower productivity per square foot or Canadian stores because we are adding 1 or 2 Canadian stores here and there and those are higher per square foot. So as you look at new store productivity in 2014, remember there's going to be about 10 Aviva stores in that mix. And they're doing sort of 800 to 900 per square foot. So I'll try to make sure that I give you enough data to split AVEVA in particular out from the mix. And then I think especially in the last couple of quarters the number one reason why people are making mistakes in their new store productivity model is using constant dollar comp instead of GAAP comp. Now what the hell does that mean? The GAAP comp takes into account foreign exchange changes. So a significant amount of our revenue is still in Canadian dollars and Australian dollars and both of those currencies have dropped against the U. S. Dollar by about 10%. So if you're not taking that into account, it'll throw your model way off, okay? So as a follow-up, if you want more discussion around these points for your modeling, please feel free to set up calls. So the second topic that requires some additional conversation is the whole discussion of core versus seasonal and how that's impacting our business. And for that I'm going to turn it over to Tara. I don't have a fancy top 10 to put up there. And I know there's going to be more questions about this after even I answered this. So let me just talk about the dynamics of Q1 and what's going on in the business. So there's 2 things. First of all, we invested pretty aggressively in core. And then the second piece is we didn't invest enough in the seasonal product. And in the core, so if you just go to the core bucket, we have styles within core that are doing incredibly well and we have some styles in core that are starting to downtrend and are getting towards the end of their product lifecycle, which is all very normal process. We didn't have the new core to slot in as quickly as we would have wanted to. And the entire team is very much focused on reinvention of some of those core styles that are down trending. We also didn't invest aggressively enough in the seasonal product. And so instead of something which is supposed to last for 4 weeks, it's been lasting about 1 week. So the good news in that is we're having great guest response to our seasonal product. I think a lot of you are getting worried about with your I know you guys are all working on your models, about what's that balance is seasonal versus core and the margins. Really, I don't see the balance changing significantly over time. Right now, we're really trending more towards what we did in 2012. And the goal is that we're going to be growing both seasonal and core because when a guest walks in the store, they just want exciting product. They don't look at our store and say, oh, this is core, this is seasonal. They look at exciting product. So our job is to make sure the entire store is exciting, whether it be core or seasonal and also to continue to drive our margin targets that we feel really confident about and we just need to get that mix right. So that's what's going on in the business right now. Okay. So I think we have a couple of runners with Mike. So any questions? Is this one going? Okay. And if you're going to ask a question, it would be great if you'd identify yourself. Right now we have about 2.45 people on the live webcast. And so now you're part of the show. So make sure you tell them who you are before you speak. I'm going to start the front row. Thank you. Adrienne Tennant, Janney Capital. Laura, my question for you as you've been here is, Lou's always been very deliberate and judicious with opening new markets, seeding the markets as well as testing and launching product. As competition starts to heat up in the Activewear space and other people are kind of accelerating faster, are you comfortable with the speed of growth in terms of global growth and then in the launch of new product categories? Thank you. Going back to what I said earlier, I mean, I think that the speed at which we're launching new categories is actually really appropriate. I mean, we're following her and his lifestyle very closely and the success we've seen with the run categories or the EnGo capsule really speaks for the brand strength. When it comes to international, I mean, I think where we have the opportunity to really accelerate our growth is in the countries and in the cities where we know we got to have a store. So think about Tokyo, Singapore, Hong Kong, Seoul, Amsterdam, Zurich. I mean, we know we're going to have a store. The showroom strategy is incredibly relevant. And as I learn more about it, it's such a critical part of who we are and our DNA. But we have an opportunity to really build local management team on the ground that can ramp up all the opening activities faster in the background while we're building communities. So that's where I see a real opportunity to accelerate the foundation in those countries and then expand from there. Janet Kloppenburg, JJK Research. Tara, I was wondering if you could talk to us a little bit about the merchandise margin opportunity. The way it sounds to us is that the seasonal product has a lower margin than the core product. And generally fashion has carried a higher margin than core. So if there's an opportunity for AUR or margin increases on the seasonal product, I'd love to learn about that. And Jennifer, I was just wondering if you could talk a little bit about sourcing lead times and if there's an opportunity to have faster response to your uptrending categories? Thank you. So to response to the seasonal versus core margins, yes. In general in most companies that I've worked for you see that your core product is lower margins than your seasonal products. So really our focus right now is when seasonal is running out in a week that's telling you maybe there's some opportunity around retail. And so in the short term this year what we're looking at in the seasonal product is there opportunity where we could command more because of the technical fabrics that we use, the styling, the detail and maybe in some of those places we don't have the price value equation right and there might be some opportunity. So I certainly we're looking at those pieces to it. So and then I think even in the core there's always opportunity. We use beautiful, beautiful fabrics. And some of those core fabrics we always have opportunity to continue to work on counter sourcing those without I underscore without ever compromising our quality of those fabrics. But as we fabrics take 12 to 18 months to develop, we'll be looking at some of those opportunities as well. Okay. So with lead times I talked earlier about what's really important is building in the multiple pathways. So we have our seasonal calendar and there's some things that we need to do with that actually with how it's working today. The true manufacturing time if you want is about 120 days that we're operating to today fabric through to make. But we're looking at what are the other pathways fast turn in 45 days. I've lived in models of chase where we can chase into product in 2 weeks. So it's layering in all the complexity to build our business that we need to do. Yes. Within this year we're building that. Yes, I think we can get I mean we're getting to fast turn already in 45 days. So what else can we do within our supply base? And I will say today it's not so much actually in our supply base. It's what we're doing internally to get to that that we're working on, the process that we have in house. Oliver Chen from Citibank. Thanks for your time. What are your thoughts on traffic and the opportunity for traffic in terms of the lowest hanging fruits of where this could go? And I know there's some degree of volatility in the marketplace. Also as you engage in a longer term opportunity to increase brand awareness and the specialness and get that more known, how do you see marketing as a percentage of sales going less vertically integrated competitors spend a lot of dollars on marketing? So is that to traffic? So to the first part of your question, I mean, I think that one of the things that surprised me the most when I got here, and that's as a result of our decentralized model is the amount of amazing stories that happen in our communities with our ambassadors, with our designers all around the office and throughout our stores. So the ability to amplify this voice and sharing these stories consistently, it's a huge opportunity to really sort of increase brand voice. And I think that will result in more traffic. As far as percentage of marketing and sales, I mean, that's really not how we look at it, right? I mean, what we do is so unique and we've built a movement. So giving the movement that voice to really speak on our behalf is a really powerful tool and it's something that everybody else is dying to have. I saw that at times. I mean, that power is incredible. So going to traditional ways of marketing really is not the solution for us. I mean we would lose a lot of our authenticity, but working more closely with some of our elite ambassadors and using them in product development in the white space, sharing those stories, helping them support their goals and visions and their communities, that actually is will add to the magic and to the relevance of how we share our voice. I'm Brian McGaugh from Hedgeye Risk Management. I was hoping that you could articulate for a minute how you trade off sales versus margins. Now I don't care about the quarter, I don't care about the year, but just as you look at your plan over the course of a 3 to 5 year time period and want to turn this company into a and I'll just throw a number out there like a $3,000,000,000 to $5,000,000,000 company. What kind of margin structure will that ultimately require? And are you willing to make the investments now whether it be on the income statement or on the balance sheet in order to ultimately achieve those goals? Well, I mean, I think we've on our earnings calls, I mean, we talked about this year being a Europe investment. And I think to achieve the goals and the volume that you're referring to, I mean, a key part of that is growing our international presence. And part of that investment really being building the team in Asia and in Europe that has that deep local market knowledge. So that's the investment we're making this year and that will unlock the potential to growing in this country. So I mean, I think long term, the goal is to maintain the margin structure that we have. But clearly, this year, we're building both that Asia, that European platform so that we can continue our rollout. Okay. It's Bob Drbul from Nomura Securities. Just have two questions. The first one, I think, for Jennifer. As you look at many of the challenges over the last 12 months, there's a lot of talk about the fast turn increase in seasonal in the business today. Can you elaborate on the organizational structure that's in place today and how it's changed since you joined and sort of where we are? And then the second question that I have is along those same lines, can the company discuss the plans to clear both of those areas of merchandise? Is there a need for more outlets? Or will it be done in the full price stores? Like what's the mechanism that you will use from that perspective? So I'll take the first part about organization. And I think the second part sort of goes to Tara. But to me it's getting us all to work together cross functionally. Like this area in particular I talked earlier about bringing all the parts that are within the product engine together. Those weren't all reporting into one place in the past. So we're aligning the teams organizationally to actually be more nimble and more flexible to support design. And I talked about really building the teams as part of the area resources lagged behind. That's just natural when the business booms. So we're getting the right people in place, getting the right organizational structure in place, but remaining nimble. It's these small nimble teams led by experts that will allow us to really I want to be able my vision is to be able to follow design with whatever they need and how we need it. So whether that's a fast turn or whether that's long innovation, we need to be set up to support that. And that's the work that we're doing right now with our organizational structure. So I'm going to we should pass it down to you. It was an outlet question. Yes. I think a big part of our markdown strategy right from the beginning was not training our guests that we markdown. We believe so wholly in our product that we don't feel like we need to mark down our product because it's good forever. Even if the color, the seasonal color is in a different season, we also don't feel like we have to mark that down. So when we look at our markdowns we have a healthy percentage that we mark down in store and then we do use our outlets to exit the rest of the product. Our outlet strategy is based on how many stores we open. So based on how many stores we have per outlet so that we can exit some of the excess inventory that we may have. And then the other cool stuff that we do are the warehouse sale. We did our very first Canadian online warehouse sale which was a huge success. We won't do it all the time but we had planned it for 3 days. It only lasts for half a day. We're out of inventory. So we don't have a we don't design for outlets. So we're not trying to drive business to the outlets. We believe in our product and we believe in the technical piece of it. So we don't need to mark it down. So we'll see with that course. Even as we increase seasonal? Hi. Dorothy Lachner with KeyKay Capital Markets. I had a question about I guess technology generally. What kind of projects you're working on? What you need? What you think you need to develop in terms of systems to take you to this accelerated growth pace? And then I guess specifically also I think Delaney mentioned getting customer profiles really getting a database that will allow you to personalize the experience kind of where are you in that process? And how long do you think what's kind of the time line for getting to that? So I think from a technology standpoint, I mean, you're going to see the investment we're making in the white space, which is incredibly unique. And Tom will go into a whole lot of details on how it's built and what it's going to do for us. But I think a key element of what we're doing as well is how we're organizationally structured, where you've got designers and R and D engineers almost PE and you've got that healthy tension, right? So there's no way you can compromise the integrity of ITER. And it takes me back to the snowboarding days where we build a U. S. Olympic uniform with a vintage denim that was 3 layer Gore Tex. And so it's when you achieve that balance that you really create something that's unique. So on the technology pricing that what we're going to show you will speak for itself. And the second part was on okay. Yes. We're making a lot of investments in what we call our core foundation. We're making investments in supply chain systems, planning and assortment, so we can do localized and regionalized planning. Making investments what we call the one guest experience is where the CRM falls into. In addition to that, it's also bringing together the way that we link the channels through a common order system. So we're building some of the foundational components and then we're taking it this year to the next phase of CRM, which will be a lot broader and really defining what that guest profile looks like and then how we link it to a point of sale, e commerce and all the rest of our digital experience through the stores and online. Paul Lejuez, Wells Fargo. Laurent, just curious who specifically do you look at as your primary competitors' biggest threats? And does your answer change when you think about core versus seasonal product? And I guess second part of that question is, if you see some of those competitors moving faster to market, will that change your behavior in any way? Thanks. I mean, competitors are the usual offenders. I mean, some of them are vertical models, some of them don't. I mean, some of them have been in the market for a while. I think that as a leader and as a creator of this market, I mean, we need to be incredibly focused on innovation and moving forward. I think the minute you start looking too much at what's going on in the market, you lose sight and you blend with the rest of the industry. I mean, I've seen that in the snowboard industry very clearly, where we led for so long. So our focus is going to be on innovation and really continuing to be at the forefront of the evolution of the lifestyle of our guests, both Ocean and Duke and continuing to provide them with products. So and we're going to move internationally as quickly as we can. Anna Andreeva, Oppenheimer. Thanks so much to the team, guys. A couple of questions to Felix. You talked about the men's opportunity being 1,000,000,000 dollars down the road. Maybe talk about the trajectory, how we should think we could get there? Are there any adjacent categories that you guys think about? And how does profitability in Men's compare to Women's? And then to Laurent, kind of a timing with the previous question. On the call, you talked about the scarcity model of Lululemon and evolving that. Maybe talk about what that means to you? Okay. So for the men's business, we do look over a multi year timeframe to get to that. And there are several components within that. I think a large component comes from the engagement in the stores. We are exploring new categories within the athletic space. So I can't reveal them now, but we will see and what you will see and the guests will see is seasonally adding new pieces that to Laurent's point are things that he's engaged in. And as we have this model that is so grounded in ongoing dialogue with the guests really understanding where they're going with their activities. So we're going to make sure they have the gear to get them there. So we will continually build upon that and we will build out what we have today to explore new categories for you. And I think that when you think about the growth trajectory of the men's business and when you think about our international expansion, we also have an opportunity to enter those international market with equal excitement for men's and women's product. So we don't necessarily have to follow the same path than we had to follow in North America. And the second question was of scarcity. I'm a huge fan of scarcity. I mean, we measure the success of our product by the velocity at which we're selling product at full retail. We've made our guests starving, so we don't want her or him to be starving, but we certainly don't mind them being a little hungry. So we're going to maintain the scarcity model and striking that fine balance of creating product demand and knowing that when she or he sees the product, it's the time to get it because it won't be there the next time around. Hi. Matt McClintock from Barclays. The presentation began with some discussion talking about the success of the Run category validates the brand beyond the yoga studio. Yet when we see the initial build out of international markets such as United Kingdom, Hong Kong, etcetera, today, we focus a lot intensely on yoga. And I was just wondering, as you accelerate growth internationally, how do we think about building brand awareness for other categories product categories? Thanks. I mean, honestly, I would look at those markets, and I would have the same response that I had for the guys. I mean, we have an opportunity to enter those markets with ill call excitement. So we're going to be deeply rooted in yoga as well as DNAs as well as our roots are. But we have an opportunity to enter those markets with a broader assortment. Do you want to add anything to that? Yes. I think one of the things that's important is those community connectors that we hire right at the beginning. So one of the things I might not have said is we also really get underneath of what sweaty activities they're doing. So when you say when we went to Kansas City, I had no idea the running community there. So we entered in yoga, but then what we saw was this huge running community. So then we had run ambassadors. We actually were able to get some of our key influencers in the running community. So we'll do the same thing when we go into international really understanding how people are sweating, what they're doing, so that we can make sure that we have the right product for them. Christian with Credit Suisse. I have a question for you Lauren. Wondering if you could talk about the earnings power that you see for the business longer term. This is a company that hasn't grown earnings last year. Looks like it won't grow earnings this year. And I'm wondering if you could provide some context for what you think the growth trajectory looks like longer term. If we could have some metrics around what that would be that would be very helpful. I mean, we're not yes, I mean, we're not giving long term guidance, right? So I mean, what we said on the earnings call, on earnings call, Styx. Yes. Sorry, Christian. Maybe ask it again so I can see if I can give you something that's an answer without guidance. Sure. I'm trying to understand what the long term growth algorithm for the business is. We're going to have 24 months with no earnings growth. We're going to have 400 basis points of margin compression over the last 2 years. It seems to me like some targets for longer term growth and longer term margin potential would be appropriate. And any context around that in the context of 2 years of challenging earnings power would probably be useful. Right. Okay. I mean starting with top line, I see us getting back to positive comps. There's lots of positive comp productivity in the U. S. Market. And then of course as we enter international markets, so like the U. S. Did start low and comp positively. So productivity increases. We're only about 2 thirds built out in the U. S. We'll probably be finished that build out in 3 to 4 years. Over that time frame, we'll be ramping up our international store count growth. And again without giving specifics, I see it taking 2 to 3 years to get up to a run rate. But as the U. S. Is built out, you'll probably see new store growth at somewhere in that 40 to 50 store range that you've been seeing as we build out North America. And then of course, e commerce growth is going together with that and adding to it. Does that give you enough? Okay, thanks. Hi, Sam Poser from Stern AG. I just was wondering what you were doing with the return policy, number 1. And number 2, what is the time frame for getting the stores situated in the big cities around the world internationally Zurich? And you mentioned a few others there. Can you talk about sort of the time frame that you see for that, but also the return policy in the stores? Is that something to better engage your customers that you're looking at and you'll commit to? I think that we've been doing a deep dive in all of our guest touch points. I mean, being incredibly guest centric and returning to those incredible experiences is key. I mean, with every brand that grows very quickly, you end up putting policies in place that sometimes are overly protective of the brand, trying to protect the trying to prevent the one person from abusing the brand maybe at the expense of the balance. I think we're at a point where we need to shift that. So a lot of the discussions that we've had with our store managers has really been if you make a mistake, on the side of delighting customers and really delighting the 99% of our loyal guests. So our 5 year promise is a good example of standing behind the quality of our product, and you're going to see more of those decisions being made. As far as finding as far as implementing those international location, I mean, it really goes back to having the right team on the ground. So building the right team in Asia, I mean, Ken is here today. I saw him earlier. He's on his way back to Hong Kong. Christie is in London. So these once we have these 2 teams in place, there's no point in running until we have these teams in place. So we'll have these teams in place this year and that will unlock the potential to really move quickly with store rollout in those regions. But I really want to we need those teams in place to really understand the market and bring the Lululemon DNA to those cities. We'll have some stores in 2015, but you're correct. Okay. It's about that time now to start the tours of the facility downstairs and it's a beautiful facility. So I think you'll be excited to see that. What we did is when we split these up into smaller groups, we are having a Laurent go with the group. So it gives you a little bit smaller time. Don't look at your tags. I think given the setup of the room, probably what's easier is we're going to go rows at a time. So we're going to start with these 2 rows, the front rows here just to the middle and then we'll come back and we'll do 4 of that grouping. If you want to head out the back door, Tom Waller standing at the back and we'll go on the tour. Leave your stuff here, you're coming back. We're back on. Stacy Rabinowitz from Consumer Edge Research. So my question is for Tara and Jennifer. As you think about not just being on trend and making sure you're catching the right consumer trends as they happen, but being that forward company that's really leading the trend and defining the new technology, new looks, how people are wearing athletic apparel in general? What processes are you putting in place? What types of people are you hiring? What are you doing differently to take that edge? Okay. And I also let Dan also talk about this as well. But we have a very talented design team here. What we're doing right now is mostly focusing DNI on what's it going to take for global growth. We're going to allow for about 20% of our assortment to be driven by the needs of that local market. So that complexity that we are going to be operating under, we're doing a lot of work in getting the teams restructured and seeing what additional talent that we need to bring on the team in order to support that in the future. And then Jennifer and I talk a lot about as you think about when you have that 20% being generated from the market And maybe you have a small, tiny design team there. It's how we're building the infrastructure below that with technology to make sure that we're getting all of that amazing, amazing intelligence back into as I call it the mothership. And you saw a lot of global brands, they've kind of done this pendulum switch. They were really heavy in market with design teams where all of a sudden some of these global brands, you don't need to name them, they became didn't look like themselves in the local markets, right? Our goal is to make sure we always show up as Lululemon no matter where we go. Now everybody swung it back to be more internal. I think we're going to strike this lovely balance of being able to get that great local intelligence, but we do need to set up fundamentally the systems and process in order to do that? In what sense? A lot of it is back to things, the PLM system, which we implemented here, product lifecycle management system. So we it's already implemented, but some of the things that Jennifer and I are looking at is what is the streamlined process from the time of an idea to getting it in the store. And so it's a lot of process we already have, but making sure that we're ensuring that it's as efficient and effective as possible. So that would be an example of that. Okay. Hi. Rebecca Duvall, Bluefin Research. Jennifer, I know you've been busy or here. Hi, Cai. I know you've been busy implementing a whole QA process and I'm wondering a couple of things. 1, do you feel like you have a normalized consistent product flow now or is there still an onboarding at a factory level? And the second thing is, as you're building all of these new sourcing initiatives, can you give us a little bit more color on what some of those initiatives look like, whether it's building a global a more global sourcing strategy, identifying your top 10 vendors and some sort of timeline when you think that will be contributing to your IMU? So first I'll start with the sourcing base. We actually have a really mature sourcing base. We have about 11 key vendors that have multiple locations that produce the majority of our product that are sound vendors. There's a lot more we can actually do with them. So I'll go back, I'll repeat this many times today because it's coming back to our own processes. We need to create a way to deliver that more meaningful to them so that they can then help us deliver the product. So I'm the end stream is not actually my huge focus right now because I feel it's in a really good place. It's upstream. And it's really what Tara and I are talking about, how do we get our teams connected to be able to make the product in the way that we want it to deliver to the guest every step of the way, building in quality every step of the way. We're doing a lot more measuring to your back to your comment on the quality part. We're measuring in a more meaningful way, so we can get to root cause analysis to then build the product the way we need to build it. So I'm feeling great about actually our vendors and what we can do with them. And we're spending a lot of time internally how do we get product to market. Are you seeing the IMU contributions effective immediately or do you see it kind of playing out through the back half of the year or when do you kind of see some sort of timeline on that? Am I talking IMU? Yes. I'm not talking IMU. And we're not commenting on IMU for conceptually. Okay. So as you so in the near term some of the things we're looking at is getting the balance right between the core and the seasonal and making sure that we're shifting our cost investments to reflect what the guests because at the end of the day we want to give the guests what they want. And then we're taking looking at the opportunities and things that we can look at right now which is right in front of us. If there's opportunity for places where we could glean more retail in some categories. For instance, I'll just give you the wonder under. We have beautiful expensive textures in those fabrics that are coming in the back half. And quite frankly they're more expensive fabrics and I don't think we are going to offend our guests in the sense of being able to charge more for those because they're worth more in the price value equation. So those are some of the things that we're looking at in the near term around margin. Maybe I can just add because I think maybe the other part of your question is efficiency on the cost side. And I think as we change our internal processes, we're more buy ready. We can give clearer outlooks to our vendors. We're in a better position not just to negotiate with them, but they don't have to build in the kind of contingencies that they might have to build into to deal with us when we're being clumsy. This is a question for Delaney. Hi. What specific changes have you made in the stores in terms of customer care outside of the return policy, which was sort of discussed a few minutes ago? And can you talk about when these changes were implemented? I don't know if we've done any major changes in the store. I think the one thing that we learned through last year was and it's not I don't want to call it the return policy. It was about how we were dealing with quality returns. I think we really made our educators have a very difficult job because they were the front lines of the sheer luon. So they had to handle all of our guest questions. So I think one of the biggest things that we did is what Laurent had spoke to in the opening, but bringing back our 5 year promise. So we lost that somewhere along the way. And the 5 year promise means that we guarantee our product for 5 years. So it's not just about a return because I don't like the color of the pants. It's about when I came back and I my perceived perception of the quality of my garment is we return that no matter what. So we stand behind the promise of our product. And so that's probably the biggest changes. I think we continually evolve. I think one of the things that Paul is teaching me is bringing the technology into the stores and really having them embrace it. So I spoke a little bit about the handheld devices that we had in store. We also had, we were able to do mobile checkout over holiday where really helped in our high volume stores. So when we I spoke to one of the stores doing $2,000 a day, we timed those cash lineups. We're super on top of that. So that mobile is also a big part of it being able to do the checkout. So I think the big thing is moving into the future, adapting new ways of actually making our guests save time and I think just being really, really present to all of their needs. Would you add anything? That's great. Okay. Thanks. Thanks. Brian Tunick, JPMorgan. I guess when you look at the tough back half of twenty thirteen, we were wondering was it more about the Lulu loyalist or the new customer potential that you disappointed? And which of those the loyalist or the new customer are you most excited to build the business on in the future? And then maybe John I think at ICR a lot of discussion around the balance sheet opportunities and we thought might hear something by now. So what's the timeframe from either a share repurchase program or a potential dividend or some use of the balance sheet? Thank you. I'll do balance sheet first because I can never remember 2 questions at once anyway. Yes, in terms of balance sheet, we have now over $700,000,000 on the balance sheet. And as I've said in the past, we have no aversion to returning capital to shareholders. Of course, if I was going to say when we were going to do that, that would be a press release. But we are at a point now where the cash that we have is in excess of the capital we need for even a very aggressive expansion plan in the midst of a recession. So it's a conversation at the Board level. There's a willingness. There's been a lot of discussion is that a share repurchase is that a dividend. And I've also mentioned this in the past. Of the things that we're still trying to get past before we can really move to a decision is and I'm sorry if I'm getting technical, but because the public company is a U. S. Company and the Canadian subsidiaries where the brand was invented, so all the IP resides. So a lot of our cash flow gets generated in the Canadian subsidiary. And our strategy has been to use that cash to fund our international expansion. So Europe and Asia, corporate structure wise are happening beneath Canada. If we change our strategy and took the cash from Canada and dividended it up to the U. S, there's actually an additional tax hit. So still working with lawyers and accountants to figure out if there's a way to minimize that. And if there isn't, then maybe we'll just have to make a decision. But that's one thing that's causing us to go slower than we otherwise might. Okay. Sorry maybe repeat your other question. I think first question. Okay. Your first question about loyalists versus new guests. And I would say we care about both, but probably 1st and foremost that we care about loyalists. So people that are loyal to brands that we don't want them to be alienated and we want to keep them loyal to us. And what I could tell you is that if you look at loyalty and the consumers who say Lululemon is their favorite brand, we outpace every competitor in Canada by at least 30 points and in U. S. By anywhere from 10 to 20 points. So we have we are the guest is like passionate about our brand. So people that are already familiar with our brand, I would say would be our 1st priority and then new guest obviously would be second. Does that answer your question? I would say probably guests that are familiar with us, because they really are passionate about the brand. So I think it's current guests were probably more upset than new guests. Hi, Paul Alexander, Bank of America Merrill Lynch. Question on the acceleration of the international expansion. Does that not raise risk that you haven't given enough time to some of these markets to precede brand awareness? Should we be thinking about lower new door productivity maybe in some of these initial markets? Or is that really not much of an increased risk? And if it's not a risk, why was that not the initial thinking of international to go at a faster pace in the beginning? Okay. Now come on, Paul. You think going from really, really slow to slow is risky? I mean, we have gone very slow. In the background, there's been a lot of legwork being done to do all the strategic research beyond international growth. As we talk about accelerating, part of it is simply we're at that point where we can accelerate without taking undue risk as you say. We've already opened numerous showrooms in both Europe and Asia just like we did in the U. S. In 2009, opened a lot of showrooms. They were doing their job seeding markets before we got there. That's the stage that we're at in both Europe and Asia. Laurent talked a little bit about just accelerating our pace of store openings just by not executing sequentially. We've been maybe guilty of opening a showroom, let it completely seed the market and then we start looking for a store. There's no reason why we can't assume that we'll be successful. Open a showroom shortly thereafter, start looking for the store location so that we're ready to open a store when the showroom has been open for a shorter period of time, but still not moving away from that strategy of using the showrooms to seed the markets. Mark Friedman, Retail Tracker. Tara, on ENGO recognizing not wanting to give any forecast, if you could give us some kind of directional potential for ENGO maybe 2 years and 5 years potential for Ngo maybe 2 years and 5 years out, so we can get a sense about the business? And then on e commerce, I don't believe we're in all these markets that Laurence alluded to or countries. I was just thinking the potential to use e commerce to lead for that, how you're thinking about that? Thanks. So the and go, again, we're not sharing any forward forecast. We're excited about the potential of the category and we're going to continue to perfect and experiment with it and innovate from it, but we're not ready to talk about what percent of our assortment that would be. And then do you want to talk about the e commerce by market or? Is that on? Yes, you guys are right. So we absolutely do that. We not only are we seeding markets first with e commerce before showrooms, but we also watch e commerce sales in those markets to help us decide which markets to go into with physical presence and where in those markets. So we actually look at where those sales are coming. So I think we're on that right now. We're shipping to about 90 countries and some local now. So we have local fulfillment in Rotterdam for Europe and Hong Kong for Asia and then the rest we fulfill out of the U. S. Thank you. Hardie Bowen, Bowen Associates. When looking at the Canadian stores, how do you analyze this seasonal versus core product? And is the seasonal product where it was in 2012? Is this had it gone down from where it was in 2012? And now it's coming back? Or is it going to be greater than it was in 2012 going forward? So there's been a lot of discussion around Canadian stores versus U. S. Stores, core product, seasonal product. I think what we find is our coasts, whether it be the coast from Canada all the way down into the U. S. Or on the East Coast, the same thing is we tend to see that the coast react to the seasonal product. Whereas in the Midwest maybe it's a slightly more conservative customer whether it's in Minnesota or up into Canada. So again, it's just about getting as we get more astute at our localization strategies that we're working on. I think we have a lot of opportunity to perfect that and how we're allocating and assorting to those stores. As for the balance of seasonal to core, what we're seeing is this trending more similar to 2012 and really that's what we're reacting to. But going forward, this isn't about shifting dramatically to seasonal away from core. This is about making sure that all of our assortments, because people need to replenish core as well. But we just need to make sure we're continuing as we start seeing the core, if there's pieces in the core that start to downtrend that we're reacting quickly and making sure that we've got new core to fill in. Level planning, does that come when does that come? Which season will it actually begin? I mean, it's been in the works and we're working through it, I know, and building the systems and so forth. Yes. But is that spring of 2015 or Q4 of 2015? So I could answer that. Since Alan's here, I'm going to take advantage of Alan being here and he can answer that. We're targeting fall of 2015. Thanks. Leitdis Buckingham Capital. Hey, John, thanks for the slide with all of the errors that analysts make in trying to analyze new store productivity. One thing that I guess would be helpful in addition to that is to actually tell us what new store productivity was last year. How did it compare the class of 2013 stores to the class of 2012? And then I guess from our perspective, we look at all the new real estate. So including expansions, including Aviva, including Australia, those are all places that the company is putting capital into, which drive the future profitability and returns going forward. So we wouldn't exclude all those kind of things. We would include that. So when you look at all that together, how do we do in 2013? What are some of the factors that may have led to the decline in new store productivity year over year? And then what do you think for 2014 we should be modeling in terms of productivity in new square footage, keeping in mind we're adding 10 Aviva stores into the mix. Okay. Starting with how have new stores done most recently and I look at it a variety of ways. I look at what's the year 1 productivity of a store that enters the comp base. In 2013, I don't have the exact numbers, but it was higher than it's been for the past, say, 18 months. It was $12.50 to $1300 somewhere in there. I look at it as new stores that have been open less than a year. How are they trending against our expectations? So I then extrapolate out. Again, I get a similar answer for the stores that are still less than a year. And the other way is each quarter I look at what is the actual productivity against the productivity of the comp base. And again, if I look at Lululemon stores primarily in the U. S, it was about I think 68% in Q4. Over the past 6 quarters, it's been in the more in the mid-60s. So on that measure as well, it's been stronger than what we saw over the last 18 months or so. I agree. I'm not saying exclude Australia, exclude AVEVA. I just think it's important to break it out and look at each one separately. So AVEVA, as we've said, I mean, it's I can't remember what they started at. They were obviously lower productivity than Lululemon stores. They're doing close to 900 a square foot now and they're comping double digits. So I would expect the new stores that we're opening to be sort of $750,000 $800,000 and then comp to catch up to the comp base. Australia is again in Australian dollars $1,000 to $10.50 a foot. It's been flat for a while. There's been a change of management as we've changed over from it really being a licensed market to now we have our own guy down there sort of bringing it into the corporate fray. So I think there's a lot of opportunity for increased productivity in Australia, but we'll see that going forward. And Canada, again, we're not opening many new stores. So I think at a very mature level of just under CAD3000 per square foot, we can comp flat, maybe low single digit positives. So the biggest factor in terms of the drop in reported productivity, depending on how you're calculating it, and what's my number one reason, it's the Canadian dollar. So a store doing C3,000 per square foot, a year ago that was reported as C3,000 dollars because they were at par. But that's now $2,700 So that's the biggest single factor in a lot of people's calculations. Okay. Thank you. John, Kimberly Greenberger, Morgan Stanley. I wanted to know if the $700,000,000 in cash that you have, how much of that is domiciled in the U. S? And I would assume that until there's a solution to the tax issue, that's the piece that's available for either share repurchases or dividends. Is that right? Yes. I don't know if you know Chris it's probably $100,000,000 give or take is in the U. S. It's primarily in Canada. And then my question is on the international expansion. I think you said after the U. S. Is built out here over the next 3 years or so that you would expect to be able to maintain a new store growth rate annually of 40 to 50. Obviously some of that will be AVEVA. But in terms of just the Lululemon expansion, how what kind of seeding of new markets needs to be done over the next 1, 2, 3 years in order to allow the international Lululemon store openings to comprise the majority of that 40 to 50? And do you think that that's actually an achievable number given the complexities of international real estate? Yes. Again, we've already got the strategies in motion. And what you'll see ahead of store rollout is you'll see us expand into additional countries in Asia and in Europe with more showrooms with a view to making sure that we do have those markets seated so that as we get 2 or 3 years out there, we can hit the kind of pace that we talked about. And again, it goes back to Laurent's comment about not being so sequential. So we have a showroom in Munich that's starting to get traction. And I think we can look at it now. And even though I'd say Munich isn't ready yet, we can have confidence that the showroom is doing its work and not too far out we should be looking for a store in Munich. So I think all of the pieces are there. And then of course as we get a presence in a market like London, we can start opening stores much more quickly. So for example, we took a long time to get to New York. We had a showroom. We opened our first store and then boom that first store really seeded the rest of the market. And we actually never needed another showroom or maybe one in New York. But I think London will quickly become that. So that will allow us to accelerate as well. Okay. And we can just keep carrying on with Q and A. It's Bob Drbul from Nomura Securities again. Jennifer, another question for you. As the acceleration of the global store base continues or accelerates and rolls out from here, do you believe like the pieces are falling into place from a sourcing and manufacturing and operational side to meet that demand? And how long will it take you to get there from that perspective? We have that in place actually. We've already projected out our make source strategy through 2018. Yes, I feel confident we have that in place. And Felix, I have another question for you. I guess early on in the beginning of the presentations, Laurent was very vocal about the competition and what's happened on the women's side. When you look at the growth trajectory that's expected for the men's business and some of the very established players and the growth stories that are there, how confident are you in that $1,000,000,000 number and getting there in a few years? No, Mike. I was confident. We're confident and we're confident because our goal and what we're doing today is giving him something unique. So I think that we have some very formidable competitors. I have a deep level of respect, certainly won their product in the past and they'll continue to do great things. And I think when you have good competitors, it makes you push that much harder. So but because of the brand that we are and because we will stretch the boundaries of this category, we believe we can get to that number. Hi. Liz Dunn Macquarie. I had a question about marketing. I understand the desire to sort of amplify the stories and really own this sort of unique conversation you have with the consumer. But there seem to be a fair number of consumers who aren't getting over 2013. And how do you talk to those consumers and try to reengage them? Because it sort of reminds me of like a relationship where there's like an elephant in the room. We're not talking about that thing anymore, but she's still holding a grudge. So how do you overcome that? Sure. So I think with our e commerce guests, it's a bit easier because we have a direct sort of relationship with them. And so we're looking at ways to reengage some of those guests. And then I would say, we're beginning to have some conversations that I think need to be had, right? So for example, in a couple of weeks, there's a Yoga Journal conference in New York, and we are doing a panel with that audience. So it's really all the yogis that live in New York that participate in that panel to really have like a really open dialogue about some of the things that happened last year. And I think it will be a really great conversation for us to be in. So and that we're planning to continue those conversations over the course of the year if they're needed. So that's just like one step. And then I think beyond that, Laurent spoke about it a bit, but some of the things that you saw today even that one story from Austin with the ambassador that got all these middle school and high school kids to run the marathon in Austin, We have stories like that all over North America that we actually haven't done a really good job at telling. And so it's about how do we bring those stories to life in a way that so our guests really begins to really understand like who we are and what we stand for. And we probably haven't done the best job in explaining that. So Hi, Oliver Chen from Citi. Felix, I had a question for you regarding men's. What is the ratio going to be over time for tops to bottoms? Is it similar to women's? And also within that space, how would you contextualize the competition? And if there's any brands outside of the space in general that you really admire? So we're just starting to because the business is so small at this point and obviously it has been and we look for future growth, we are deciding what we want that tops to bottoms ratio to be. So we're not finalized with the numbers yet, but we do believe he definitely is going to buy more tops and bottoms. So the tops will absolutely be higher because he can also wear them and we encourage him to wear them for activities outside of athletics. So we'll definitely have a higher tops to bottoms ratio. In terms of competition or other brands, As Laurent said and as we talk and inspire the design team, it really is there's that engagement that we have with a guest and then looking up and above. And what I mean that is really sort of looking to trend and it's whether it's fashion, health, lifestyle, economic trends like understanding the world around us because we don't necessarily look to a brand specifically because we are creating something unique. So it's really taking a variety of inspiration and blending it together. So sorry Sharon Zack with William Blair. I've been holding this mic for a while. So, a question on e commerce. I think you're already past what your targeted percentage of sales was going to be for e commerce. You used to have like 15% was the long term target, you're above that. And you still have a very limited assortment online. So there's been this kind of theoretical talk over the years of e commerce really being that backup that all seasonal kind of all category backup to those very small highly productive stores. I mean what is the gating factor at this point to having more robust inventory content online? And then where do you ultimately think e commerce goes as a percent of sales? I'll take that. So we actually we don't have a limited assortment online. The challenge is that it's selling out really fast right now. So that scarcity that we've talked about that is something we want but not at the level it's at. People were going through inventory so fast when we put it up that it probably feels like we have a limited assortment. So there's a natural swing there, which is put more online. We're at we're approaching 20% of sales. I think we're at 18% this year is what we're thinking. And I would see it growing to at least can I say this number? I don't want to get in trouble from John. How we handle our outlook on e commerce. We started with a 10% target and then every time we hit it, we raise it by 5%. So say 25. 23. What we see right now, the highest is up around 30%. We're actually really healthy at the percentage we're at. We're above most vertical retailers. The ones that started as catalogers and have that long term online behavior built in are up around 30, we'll get there within the next few years. The part of this that excites me the most is the change that we've made in this organization, which is merging the stores and online and really thinking about it like you're asking that question. It's not a separate channel. It's how do we leverage e commerce to make the shopping experience more convenient for her and him and actually enable them to have more access to our product. So in stores what that looks like is the handheld device that Delaney talked about for now and that will evolve over time. But she can walk in, he can walk in and walk out with 2 items and one's being shipped to their house the next day. And the fact that we're paying our stores on that, that's a game changer. So over time, what I would expect to say, I'm going to just go totally out of my depth here and talk about comps, is that you'll actually see our store comps affected by an increase in online sales and we're okay with that because what we're really shifting towards is a total market comp and total market growth number and that's how we've reorganized. As a follow on to that, the personalization that I think that Laura talked about even the men's versus the women's, what's the time frame on rolling that out? Will it be something that will be a new relaunch of the site and will be very obvious or will it be more evolutionary for both men's and women's? If you look at the results that you had on the test of Lululemon anywhere with the handheld devices, did that then follow on with additional registered users on the website, so you could track the customer in a new way and build the relationships with them? And then in terms of men versus women who shop online, because of the deficiencies that you felt that you've had on the website for men, is the registered users for men online less than even the 15% -ish currently that the men's mix is? It's a whole bunch of questions in there, Budd. I'll start and Laura, Felix anyone can jump in. I'm going to go backwards because your last question is freshest in my mind. So men's, yes, we know that women are buying men's product online. So I think our men's registration number is probably less than that percent of sales, but climbing fast. It's growing online. It's the fastest growing online part of our online business. So it's working. From a repeat the first part of your question. Looking at the Lululemon Anywhere, as you brought that online point of sale, if you will, into the store, was that just furthering a relationship in many instances that you already had with our consumer? Or was that also introducing a new customer to the online channel? You know what I'm saying? Absolutely. It's a great question. And I would say we just exited our pilot program and we're just now getting into rolling it out to all stores. So we're crossing that bridge right now. We haven't yet gotten into what's coming next, which is the convenience factor in having them really focus on setting up accounts and registration so that when they come in, it's a really, really quick process. Right now we're still in the phase of it's almost a full online checkout procedure, but we're 3 months in and we're headed there fast. Alan's team is doing a great job in getting us there. And that becomes the foundation of not only our CRM program, but also that increased personalization and engagement that you talked about. You want me to talk about personalization because you asked about that first? Yes. Okay. So yes, we're not I would say we're not rushing into personalization. I think of it like our stores. So when you walk into one of our stores and you live in the neighborhood and you shop in the neighborhood, our educators know your name. They know what activity you do. They know how you sweat. They may know what size you are and they know what you like and they may know the makeup of your family. We would love to replicate that online in a non creepy way. And the things that we won't jump into right away is what you experienced online in like retargeting in advertising and making it feel like just because you one time looked at a yoga pant, we're going to just blast you with yoga pants. And Delaney says this really well. What we want to avoid with personalization is we're kind of the place where you can go to find out what the coolest, newest workout is. And we want to make sure we maintain that that we're actually sharing with them what else is out there, not just what they're always participating in. So but we'll figure it out and we're really excited. We've done some tests and we're headed there quickly. Betty Chan with Mizuho. My question is regarding AVEVA. Sounds like obviously you're very pleased with the sales productivity being around $800,000 $900 per square foot, which is a great number against the industry. But I was curious, do you feel like there might be even additional opportunities for the team to increase that number? In terms of rolling out the stores, how are you kind of seeding the market to figure out where you should be opening the stores? And then how we should think about the 4 wall on those stores relative to the Lululemon brand? Thanks. Yes, I'll take it. So we're seeding the market with the same methodology we've used for Lululemon, which is showrooms. So we're opening 10 stores this year, but we're actually opening 25 showrooms. So we're in 25 new communities. The seating looks a little different, right? We're not necessarily out sweating in classes with the girls. We're going to studios. We're going to their team sports. We're going to the events. We're connecting with coaches, we're connecting with the adult influencers that really work with those girls. So that's our showroom to store strategy. And then from a productivity perspective, yes, I mean we're 5 years into this journey. So we are still it's a big white space for us in terms of AVEVA and there's a lot more we can be doing in that in those stores. But we're really excited to see the productivity at the number it's at already. Does that answer it enough? I mean, I think it's probably too early to get specific, but just conceptually, the productivity is lower than Lululemon, but very strong. The IMU is less. I don't know if you want to comment on that, but there's more sensitivity, I think, for pricing of children's wear. The gross margin is going to be a little bit lower. So again, so without taking it further and saying and the 4 wall contribution will be X, those are the two key differences. Just before we get going, can this group come now anybody that wants to see the R and D center so from this row back? And just head out follow Mary head out down to the facility and Tom and Laurent will meet you there. Dan, the question. As you think about the capsule collections, how many other capsule collections should there be? How long should they last? And then Jennifer on the sourcing side of manufacturing, where are you in terms of getting to a merchandise margin that you'd like to see? And are you at the manufacturing capacity level that you can get there? Are you still building those relationships? So I think one of the things I'd love to get away from is this capsule collection concept and start thinking about how do we bring beauty to the sports that Ocean does. And as we think that through, how do we strategically build out a category, right? Because capsule to me is you're just you're in and out and testing it. And we need to really think about stepping back and being strategic in those areas that we feel she wants to have us in her life in those various sports. So that is a shift in the thinking and DeAnne and I are going to be doing a lot of work and are doing a lot of work with the teams kind of thinking those things through. And we're not really prepared to talk about those yet, but there's quite a few areas that we're excited about and you will hear more about those over time. Okay. Is your sourcing and costing question specific to capsules or just in general? Again, we have a solid supply base. And one thing that we do is actually we have vendors that can do a breadth of our product. So speaking to capsules, when we do that, we actually can leverage that within our supply base. I'd say our opportunity or what we're looking at right now going back to that fabric expertise led team is there opportunities in our fabric, innovating our fabric, getting the right fabric for end use and looking at cost efficiencies there more so than the make of our garment is what we're concentrating on. Hi. Eli Hallowell from D. E. Shaw. Can you tell us what the sort of ratio of new customers to the brand versus repeat customers to the brand is and how that's evolved over time? And can you talk about how you think about lifetime value of customer and cost of customer acquisition? Paul, I don't know if you can I mean, I don't think we can answer that from a store standpoint? I think the only place where we would really have access to that information is really through our e commerce and online. I don't know if you can add to that. Do you want that? No, I think it's accurate in terms of a number. We are just over half in terms of new versus existing. We don't collect data at the stores yet. So until we have the CRM system implemented and usable, we just don't have that data. Before we go to the next question, the beauty of social media is I've already had feedback on things that people are misinterpreting. I don't know if it's me or Laurent made a comment about we expect to maintain margins and people took that as maintain the margins that we're seeing in 2014. Just to be clear, the point was we've always talked about a margin structure that it have a, call it, a mid-20s operating margin. And when we say maintaining margins longer term, that's what we're referring to. Thank you. Hi, Roxanne Meyer, UBS. My question is on the fast track program. Just wondering if you're able to share what percentage of sales currently comes from the fast track and just how much you think that could grow over time and how do you see it evolving over time? Thanks. So I'm not going to share what that percent is right now. But let's just say it's a very small percent and we both Dan and I feel like it could be a much larger percent of our assortment and that is one of our focuses is really building out a strategy for the fast turn group in partnership with the sourcing group. So that's a lot of work that's being done currently. Hi. Karina Friedman from Wedbush Securities. A few questions. I'm not sure if it's been asked already, but you've talked a little bit about how the sport she's participating in has changed over the last 14 years. Have you seen any other changes in the demographic or the makeup of your customer? Is she getting younger? Is she sticking with you over the last 14 years? Is she more affluent than she was previously? That's my first question. I was only half listening. So I'm like, oh, this one's not for me, but they're saying take it. So On your demographic now, it probably might have changed over the last 14 years. I wonder if I should go here. But when we did have when we pull when we did disappoint our guests in 2013, the ones that really stuck with us and said that's okay was our core guests. So our core guests didn't change at all. And then as we continue to build trust and beautiful products, we're going to gain all the guests back, let's call it back, that the core guest influences. So we haven't seen a shift at all. We've seen actually an increased loyalty in that target guest. So if that makes sense. Is this on? Don't say anything. Is it on? Is we design for a late 20 year old early 30. That's who we design for. And I witnessed being in other companies where they aged with their guests and you don't want to find yourself in that place. We are very clear that we design for a 30 year old. So My next question is about the bottoms trends. These seem to be sort of stagnating at this crop look, which we've had for about a couple of years now. Is there anything you can tell us about the silhouette and if it's changing? And are you seeing anything in the market now about maybe fuller legs? Did you say you're seeing a crop look kind of trending? We've had the same sort of silhouette on bottoms in the athletic for the last 2 or 3 years? Yes. Is there any changes? Yes. I think Tara was talking to it about we actually let the life cycle of a few of our core items go on a little bit too long before we started to kind of test trial new silhouettes. And that's exactly what we are in the stage of right now. And we feel really that you'll see a shift in bottoms for us when you walk into the store August this year. So we've been working on it for a while. Is that yes? And we don't usually comment on specifically where we're going with silhouettes or whatnot because I don't necessarily want to share that with the competition. You'll see a shift. We're on it. Hi. Liz Dunn again. I apologize if I missed this given we're kind of coming in and out of the room. But is there any opportunity to do more online exclusive sort of product and maybe some of these formerly called capsules, which we're moving away from like for them to exist more year round online? And then also what it seems like the way that you introduced and go that it maybe had more of a life than just that first surge that sold out in 2 days. Like what's the where is that going? So I think we're at an interesting stage in the industry. We have a lot of merchant and planning organizations that either came up through brick and mortar or came up through the digital side. And really what we're trying to do and how we're restructuring things are to get people to not be confined to the 3,000 square foot store and to really say strategically, if I'm going to build out all these different opportunities or ideas, if I didn't have constraints of the walls, how would I really approach that, right? And that's basically your wall list store, right, your online store. And then as you get more sophisticated as we get our new tools and systems in place to really be able to allocate and sort really effectively by region, you almost use that online space as you will as the holding place for these different ideas. And then depending on what part of the country and as you heard Delaney say, as we know how they like to sweat in that part of the country, You may amp up pieces of that in that physical store space, certain elements of the assortments and downplay other things. Or if you're finding in a country that yoga is more important, you may amp up an expanded assortment that may exist online in that store and maybe shrink another one. And so it's just really starting to drive that shift in how people think about and how the merchants think about assorting the store. And so some of the restructuring we've done is that now the merchant, the merchant owns the how they're assorting. So they're really thinking it through what's going to just maybe be online and what they're going to put in store. So that's a it's a big shift we're going through right now, but we're really excited about it. And then as for the and go, Diane and the team, they wanted to get out there in 30 stores in Canada, 30 in the U. S. And learn from it. And she's already reacted to the best selling items and it's back in store. Those items are like the dress you're wearing, which you look so fabulous in. I won't make you get up and model. But we already have that coming back in for fall and it will be in all stores. Okay. Does anybody in this section have a question because you're just about to go downstairs to your thing? Okay. And yes, hang on. Yes, I can talk loud. I just wanted to ask as far as marketing for the online channel, are you reaching out to new to acquire new customers? Are you marketing to new customers? What percentage of your house file do you have the email accounts for? And how do you talk to those customers? How frequently? What is the agenda there? And I had another question and I forgot it, but we can do that. Maybe it'll come back. Go ahead. Laura, do you want to take that? That was all marketing. Yes. Go ahead. So we actually have our weekly e mail that many of you may receive that goes out every week when we drop new products on Monday night. And that's our primary vehicle to communicate with guests to let them know what's new in both stores and in e commerce. And I would say that's like our primary vehicle. And then we use our social channels to communicate what's new constantly, right, whether it's to feature the EnGo capsule or whatever it might be. But I would say the e mail is probably the biggest driver of traffic both to e commerce and to our stores. So as of the online channel and its rapid growth, does that influence your store opening strategies at all? In other words, could you be could you go lighter in a market in terms of footprint because of the success of online in a particular region? Is that something you've given consideration to? Our thinking at this point, I mean, you remember back at the IPO, we talked about 300 stores in the U. S. And our productivity has doubled since then. Without online, I think we'd be saying, gee, should we do 400 or 450? Online has taken up that slack though. So I think that's where it's influencing our store count. So we're still talking about 300 and I think that is the right number. If you went to 400, you're getting into B malls and locations we don't want to be anywhere anyway. But I do think 300 plus e commerce is the way that has evolved. Delaney, but when the customer buys 1 piece online and 1 piece in the store and it's one transaction, is there a shipping fee involved with that for the guest or is that something you pick up? A lot of stores now when we do it in the store, we don't have to pay for shipping. Yes. We haven't fully built that out. That's our goal. That's what we want to create for our guests. And we would have the same shipping rule that we have with e commerce which is free shipping. Yes. Okay. If I can get the back half of this group to come out and just follow here and we all go downstairs to see the R and D facility. And there'll just be a couple more questions and then you guys will be released. Great, thanks. Mark Altschwager from Baird. A quick question for Tara. You talked about the commitment to the premium position in the market. And as the competitive environment picks up, what's your process for monitoring that landscape, benchmarking technical attributes and really ensuring you maintain that premium edge each season? I don't even know where you are. I'm sorry. Where are you? I'm like where is he? It's like the voice from above. So from the technical aspects, Sid, did you take the tour in white space area yet? That's going to be a critical area for us to be able to test the performance of our product as well as I mean do you want to talk to this, Gee? I mean are they use of our ambassadors and a leader? I want to deleverage our vertical model because we do go out to all of our partners and we say show us what you've like beyond what we're doing downstairs, but show us what you've got. We have the ability to get that to market faster and at a better price than anybody else. And then our relationship with our guests, we actually know we can pair that up. We can see the technology that our partners are bringing us and we can see we can talking to our guests and see what their like urgent, urgent needs are and we get to pair that up I think faster than anybody else. I think that just for me just guarantees us we're always going to lead. So it's our magical little thing. Thanks. One of the unique features of the Lulu model is how you guys capture feedback from the stores. From what I understand, it happens over a call on a weekly basis or I don't know. But you're growing international now. You have 200 stores or so. I mean, how does that evolve and change? Yes. We're talking about it. So we were just talking about it this week. So I actually personally run that call and with Felix. And it's we're reading over at least like when it's all cumulated with our showrooms, with our wholesale accounts, like everybody's kind of giving us feedback on product into this one call. So we're reading almost 300 line items. And so it is getting bigger and bigger. But the value of us reading it ourselves versus a system possibly filtering it for us is obviously really high. So we're just looking at how we can how we're going to scale it exactly like you said how we get bigger. But it is such an essential part of how we create innovative product because it is really one of our number one ways that we're listening to the guest. So we don't have the answer and we do need to scale it. Thank you. Hi, Delaney, I have a question about the store manager compensation, which you mentioned a couple of times. And also you highlighted the entrepreneurial element of letting the store managers make decisions at the store level. And I think if you visit a lot of stores, you can see that, yes, sometimes certain stores have certain markdowns going on within the stores that they have some discretion over, if they think they're at the end of a just broken assortments or something like that. And they also can merchandise a little bit differently from store to store. So I guess my question is how do you keep all the store managers kind of going in the direction you want them to go while giving them this entrepreneurial element? And then along with the compensation, obviously, it sounds like you bonus them based on a sales figure. Do you also bonus based on like a gross profit dollar figure? Because if you're giving them discretion to mark down things in the store, are you incentivizing them to mark things down unnecessarily just to hit their sales figures? I'll answer the first one around the entrepreneurial manager and ensuring that they're making decisions for their market. I think that it's super important for them in our training program that we teach them the why we do what we do and they can figure out the how. And I think that we make mistakes and we have to be okay with the mistakes that we're making because ultimately our wins are so much bigger. So I think about if we were to tell them every window to do and have vanilla windows across the board, it would be really boring. And I actually wouldn't want to be a store manager because our windows are so fun to generate excitement. So we give them the why we do it and some guardrails and then let them create. And ultimately, I think we've had a few failures. But the really cool thing is we've had some incredible windows that make me laugh so hard and make our guests so happy that I think that's part of our winning formula. So it really is about the discipline about letting them run their business. The other thing that I think really important just I did mention it in my talk, but just about them owning their budgets. It's also them being able to be part of the giving back. So they run their budgets, they can figure out their giving back and what they want to do for their communities. So they're really making decisions for the overall business and health of their business. So I think that's really important too. So there's so many little pieces that they're responsible for and we give them the guardrails for that. And then in terms of their for their pay, their pay is based on there's a few lever or triggers within how they're compensated. They have a base pay and then they're paid by performance and there's a percentage that is their performance. It's not fully managed from the bottom line. We mean that if they were to take extra markdowns to hit their top line, we don't over manage them on that, but they have actually a percentage of markdowns that they can take within a store. So it's not like they're just fully bottom line, they get the profit from that, but we still manage them from the top line with a couple managing their labor and managing their budgets. But then they can actually make decisions within it. But then again, we give them guardrails around markdown. So if we say that we want them within 8% to 10%, they have to fit within that and they can't go above that markdown. Yes. Also schedule the labor within the stores too. You don't have a labor scheduling software system that tells them when they should have the greatest number of employees in the store that you use or do you make that available to them? How does that work? Yes. So they have a tool that they can use. So it allows them to see what based on what we're projecting or their forecast sales are. It'll tell them what how many people they would need to staff for that and how many hours they get and then they gain hours by over performing. So they manage within those hours. Thanks a lot. Hi. Camilo Lyon from Canaccord. John, this question is for you. So Tara and the team has they've spoken a lot about the structure that they've put into the play into place commercialization, seasonal calendars and the like. What does that work? What kind of visibility does that work give you that you didn't have before in your budgeting process, in your planning process? And when do we start to see some of those positive benefits start to materialize? Okay. I mean, I think visibility in our budgeting process is different than what are the benefits. So let me focus on what are the benefits. Again, 20 13, 2014 and to some extent 2015, you're seeing the investment to develop what they've been talking about. But again, there's all sorts of benefits to gross margin once we're into sort of late 2015, 2016. And I talked about the ability to maybe get better pricing from our suppliers. More efficiency in the supply chain will reduce airfreight, will reduce fabric liability, which is what we're left with if we cancel orders late in the game. So I think all of those will when I talk about getting back to our traditional long term view of margins. I see those being the pieces that get our gross margin back towards that 55% level. Does that answer your question? Yes. Thank you. Thanks. Hi. This question is for Tara Caroline Chiodo from Sandler. Tara, can you elaborate a little bit on the scarcity model and how that evolves? Because we just want to understand you want to have more product available to your guests, but you still want to have scarcity where not every single person is wearing the same outfit in the gym. So can you just sort of help us understand how that evolves? Are you just ultimately making larger merchandising bets and risks on that? So I love our scarcity model. I'm just going to say it, I'm going to underscore it again and again, having come from other large vertical retailers who spend when they're doing their plans and setting their plans for the quarter, they're already planning into significant amount of markdowns. And the amount that you just flood the market with product that people get trained that they don't need to buy at regular price. So I love that Lululemon is very thoughtful about how we plan our seasonal product. I think that we did not have the intent of something running out in a week and that we have opportunity to step back and we've relooked at the fall buys and the holiday buys just to make sure if something's intended to be on the floor for 4 weeks that we can satisfy because we obviously don't want to disappoint a guest. And I also think one of the really important ways we drive traffic, some most retailers drive traffic through their markdowns, the customers know the cadence of their markdowns and will come in. I love that we drive traffic because people want to come in and see what's new, right? And it's just so brilliant that they want to come in and see and touch and feel and experience our new product every month. And also they know they can go and do a gym workout and they're not wearing the exact same thing that everybody else does that has on. And I also love the scarcity model because it keeps pushing us to have more innovation is to outdo ourselves than the last time. So that's really I mean, I don't think there's anything more to and Dee, anything else you'd elaborate on? Felix, to get to $1,000,000,000 in sales, what role do you see men's only stores playing in that goal? And how do you see the store footprint dedicated to men's transition over time? So as Laurent alluded to earlier, 3 stores this coming year, 1 in Vancouver, 1 in Santa Monica and 1 in Miami will have dedicated men's spaces. So the store design team in working with the community connectors really understanding what he's looking for. So I think, well, what we will deliver is this brand experience. So as Delaney pointed out, it really is specific to the community. And then now as you look in that box, how does the gender variance sort of modify the experience? So what we'll achieve is the guest walks in and whether it's Duke or Ocean, it's going to feel like Lululemon and his face might be a little darker, hers a little brighter, but the brand feels consistent and cohesive. So the guests can go from one space to the other and experience and engage with the brand. In terms of future growth, we have 2 40 stores today where we have more opportunity in men's. So we definitely look to open men's stores. But in terms of optimizing and getting to that $1,000,000,000 number, it really is in maximizing what we have today and growing it even further. I think we have time for probably just one more question. We're a little bit over time and just to respect people's flight arrangements etcetera. So again maybe one more question then we'll wrap it up. Thanks. I have a question for Jennifer about the culture and what you're doing to improve the efficiency of your organization because you mentioned this is a very entrepreneurial company obviously, yet you're putting some more structure around the process. How in a Lululemon Way are you giving incentives, goals, etcetera to your group to effect what it is that you're trying to do over time? How are they taking to it? So what's funny is that the process we have today is actually stifling a bit of the creativity because clearly it's not the right process. So we're really looking at lining up with design. So I talked about raw materials being more expertise led and really driving and owning that. But our product development teams and sourcing teams and quality teams are all aligning to the pods. So instead of them being one big group, they're in their small groups and can really connect with their design partners in that way. And I think that keeps it You can have an overarching process and things that we need to at least stay within the guardrails to, but it allows that entrepreneurial problem solving within each little design pod. That's different than where I've been in the past. It was kind of a bigger engine that is going to suit everything and it just won't work here. It's much like the stores, right? You have those guardrails, but people get to act and actually problem solve with expertise in their little groups. And that's what I think will really make a difference here. Okay. Thanks everyone for making the trek out to rainy Vancouver. For those of you on the 4 o'clock flight to New York and other flights, hopefully we've left you enough time to make your flights. For those of you sticking around for the weekend to enjoy either Vancouver or Whistler, I understand the sun is actually going to show itself tomorrow. So I hope you have a great weekend. And again, thanks a lot and we'll talk to you in June when we report our Q1. Thanks.

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