Hi, everybody. Thank you very much for taking the trip and coming to join us here in Vancouver. 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. 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 bio breaks. There's juice and coffee at the back of the room. 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. 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. Most of you, I think, brought in your luggage. The rest of the groups came on buses number 2 and 3. 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 two and three 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 where you're going. They'll go at about 1:45.
Between 1:45 and 2:00 they'll leave, which should get you there for, I think a lot of people are on that 4:00 flight home. If you need to do something else, come and find me. We'll sort it out. That's it for housekeeping. With that, I will pass it over to John, who will be managing the program for the day.
Thanks, Trez. As Trez 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 two blocks from the beach. More importantly, it's about six blocks from the original Lululemon store up on Fourth Avenue. It's a perfect location for us. We moved in here about three and a half 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. We occupied about half the building. It was even quirkier than it is today. Over time, we've been able to move all of the other tenants out. At this point, we occupy the entire building. We were able to do a modest renovation.
It does look a little better than it did when you were here two years ago. We have advanced amenities like a reception area now. The toilets flush. 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. For this morning, you're going to see a series of presentations starting with Laurent, and then a series of people talking about product and the product engine, store and e-commerce operations, all the way through to brand. Laurent will be first up and 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, first day, he gave me a gift. He gave me this really cool coffee mug. I just thought, "Wow, this guy's going to be fabulous." I hope you like him as much as we do. With that, I want to turn it over to our new CEO, Laurent Potdevin.
Good morning, everyone. I actually did not give him the mug, I sure hope that he embraces the words on the mug. It is our pleasure to welcome you to what we referred to 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 product, 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.
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. There was never a doubt when I took on this role that Lululemon's business model works in a fundamentally unique way. 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 touchpoints.
Our store productivity continues to be the best in the industry, and our operating margin is both strong and sustainable. 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's? If you ask me what makes 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 guests aspire to. I recently used, in one of our all-staff meeting, Alan Kay's quote that says, "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. Certainly, nobody taught us to put our fixtures on wheels so that we could move them around and offer free classes. 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. 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.
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. Our guest is not just about yoga, and we are anticipating, through our educators, ambassadors, and designers, we are at the very forefront of her ever-evolving interests and activities. While yoga is still a big part of her life, she runs, she spins, she does TRX, she does CrossFit, she does the Barre method. The success of our run category really validates the strength of the brand beyond the yoga studio. Tara and Deanne are working on new categories, which we will present when the time is right.
Further than that, beyond yoga, running, and CrossFit, the recent success of our &Go capsule, which I'm sure you've seen, speaks for the elasticity of the brand as we follow our guest from morning to night. This lifestyle product collection resonated with our guests exceptionally well and will become an important part of our collection. As we build this new segment, it will be consistent with our history of designing technical products. The product will be technical, the features will be brilliant, and the execution will be beautiful. To address this need with focus and to deliver uncompromising technical product, we are building dedicated pods with designers and R&D engineers to support those specific categories and those specific fabric development groups.
Moving from women to men's, Felix will speak to our men's department, who by the way, just moved into their own space, which is probably the nicest space in the building right now. Just recently moved into their space on the third floor. In the men's market, 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 worn a whole lot of that product for the past three months, I've been amazed with every piece that I've been getting, from features to fabric to how well it functions. Can get on the red-eye tonight, land in New York in the morning, and have unwrinkled pants that are totally dry. We're 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 billion in revenue over the next few years and are investing accordingly to bring that vision to life.
We will enter a new international market with equal excitement for men's and women's. Now, moving on to ivivva. ivivva is another great example of origination. In addition to introducing girls to beautiful technical wear that is specifically designed for them, we're engaging the young guest by sharing our culture and values and engaging her in her community. As she enters adulthood, the evolution to Lululemon and our cultures, our values, and what we stand for will be natural. Our ivivva strong performance is strong, very strong, with double-digit comps, and we store productivity closing in on that $900 per square foot, already one of the best in the industry. Paul Zaengle, who will be on our Q&A later, has been leading ivivva for the past two years.
We look forward to building this little sister of Lululemon into a substantial part of our business with a half billion dollar potential. We will be opening 10 new stores this year, two in Canada and eight in the U.S. 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 two of our new Whitespace Workshop later on this morning, maybe early this afternoon. You guys will actually be the first one to discover it. 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. 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. Fit, function, and performance is permission to play at Lululemon, and the Whitespace 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. We are returning to our design-led philosophy by continuing to invest in exceptional design talent to support our growth across categories and in 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. Tara 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. Last but not least, we are continuing to invest in supply chain and quality with the goal to achieve 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, we are seeing key metrics improve, and Jennifer will talk about that further later on. 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 disruption 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. Our goal is to align our objectives and incentive to solidify long-term guest loyalty.
The recent implementation of our Five-Year Promise is a great illustration of instilling confidence in our guests on how we stand behind the quality of our product unquestionably. Deanne and her team are leading all of this strategic work across all channel and 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 it will unlock for Lululemon. 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 a very significant competitive advantage doing this, given our vertical retail model and the emotional connections we have with our guests.
I discover that every day. 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. 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 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 two weeks ago for our store opening. Yep, we did do that. The response from our guests was overwhelming. We've exceeded our sales target by 60% since the opening, 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. Our Asia General Manager, Ken Lee, who just finished his onboarding in Vancouver, is on his way back to Hong Kong to gear up showroom and store rollout in the region. Christy Manes, who's one of our strongest operators, just relocated to London for two years to build the local Lululemon team. Her deep knowledge and her understanding of our DNA, with the ability to build a local team, will help us in accelerating, will be key in accelerating our European rollout. 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.
As we look forward, we are prioritizing the largest and most strategic market across Europe and Asia. You may wonder how we may estimate the full potential of those markets, given that for the most part, we've created them. 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. While we analyze market data in a whole lot of depth, the magic really becomes in the mix of the science and the art.
We use the science, which is the data I just described, 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. It's the magic that gets built between the art and the science. 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 million market. If we had limited ourselves to the yoga market, we wouldn't be $1.6 billion today, and we certainly would not have as deep an understanding of our guests, our lifestyle, and its evolution. The same opportunity exists for us in the global market, 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 timeline 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. 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. 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.
It cannot be mimicked. It cannot be replicated. What we need to do is we need to continue to invest there, do more of what we do best, then invest in sharing that story and amplifying it. To amplify our stories, which I discover every day, we're working with elite ambassadors that are helping us across product development and that we're supporting with their goals and vision and creating an authentic global voice for the brand. 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 times of the year. Laura will go into further detail during her presentation. Our brand-building strategy is incredibly unique.
We do not need to endorse athletes the traditional way. We do not need to pay them to wear our product, we certainly do not need to advertise in a traditional way either. As with everything else, we've created our own movement, looking ahead, we will stay true to that mission. Elevate the world to greatness through authentic human relationships and amplify our voice to share who we are, what we stand for around the world. This will strengthen our loyalty, the loyalty of our current Lululemon community, and grow it. 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.
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. 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, an amazing group of people. Thank you.
Good morning. I've met many of you over the past five months. I started here at Lululemon in November. I was at ICR and various analyst meetings that I've been in. 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 Millard Drexler, who was, I would say, was so instrumental in both my training and mentorship. I also worked at The Children's Place, and most recently for Sears Holdings in the mass sector, running a multi-billion-dollar Kmart apparel business. Why was I attracted to coming here to Lululemon? I am a lifelong athlete. I grew up as a young girl, ski racing.
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." My question today is: how are we going to create global greatness in the next stage of our growth? I'm going to have various members of the product team help me answer this question for all of you today. First, Deanne Schweitzer, who is the SVP of women's. Deanne and I are going to do a little tag-teaming today.
I'm going to start off talking about technical meets beauty. Deanne is going to come up. She's going to expand further, give you a little bit of background on how Ocean, who's our muse, is evolving, and talk about the innovation that we are working on. 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. I'm going to come back up and take you through ivivva and talk about how we are creating the next generation of powerful women. Jennifer Battersby is going to really round out the presentations. Jennifer's the SVP of Global Sourcing, Quality, and Commercialization.
She's going to outline how she's laying out a foundation to support a deeply rooted culture of innovation. You heard Laurent talk a lot about our global growth, preparing us for global growth. At the very end of all the formal presentations, Tom Waller, as Laurent said, is going to take you through the Whitespace. In Whitespace, 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. 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. I'm going to be super aggressive about maintaining our place and our ownership of this.
A lot of you guys have queried me over the past five months, "What are you guys doing about all the competition coming into the market?" 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. 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.
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 what 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. 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. I see some of my female friends down here nodding their heads. We know this.
The team had a lot of distractions last year, Luon being one of them. I can tell you, the design team is hyper-focused on bringing technical and beauty to every single product that goes in our store. 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. Because from there is where we're going to innovate from. Deanne's going to share some of the innovation we've done with &Go, but let me tell you, we're just getting started. We're excited about the things that we can't talk about today, but as we go forward, we'll share. We're really excited about the innovation that we're going to bring forward.
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 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. Moving on. 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.
I'm going to show you these concept boards, 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? They are constantly using the product and perfecting it. They know what's going on in the runways. They love that, but they also, they're athletes. 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.
When you have constraints on creativity, it's amazing what you can create from there. We believe that technical and beauty, those are our creative constraints. With that, I want to take you through these concept boards. You can see from here we had laser cutting, that we were exposing peplums we talked to the team about. Camo, floral, photoreal. Tailored, which you'll see more in the &Go product. Micro pleating. Again, I'm just going to keep underscoring performance above all. What I'd like to do is bring three models out today, so we can share with you how all of this great inspiration showed up in the product. If the models could come out and I can take you through that. We talked about camo, and this is our 650 fill little vest, which did incredibly well in the stores.
This is something that was in for about a week that should've been in for 4 weeks. We love this product. Underneath, you can just show, again, from a technical perspective, you see our Silverescent, our proprietary anti-stink property, our run shorts with four-way stretch, also her run backpack with reflective. We have the whole photoreal trend. You can see it showed up in our tennis outfit. Underneath that, we talked about the mesh. There's a really important mesh trend happening right now, the side mesh. 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. The peplum trend showed up. The perforation cutout in the bag.
Our great &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 sorts, you're going to see more of that as we go into holiday. The peplum top that's underneath, if you can just take off your jacket. 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 way. Okay. Thanks, you guys. With that, I'm going to turn it over to Deanne 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. Hi there. All right. Good morning, everyone. I have some notes. I'm going to bring some models out as well in a little bit. I am Deanne Schweitzer. I've been with Lululemon for 13 years. Actually, 13 and a half, and 10 of those on the product team. Currently, I head up the design and merchandising team for women's. I love the theme this morning so far. Really, when people ask 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. All day, that's what we talk about, and they're paying us.
I'd be doing the same thing if I was at home, so that's why I'm still here after 13 and a half years, and we have a lot of fun. I'm going to talk about Oops, do I have a slide clicker? 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. The 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. 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.
As Tara spoke to, we are aggressively ensuring that we continue to be the leader in beautiful women's athletic apparel. Honestly, without distractions like last year, 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. 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. Most importantly, our guest doesn't just do yoga anymore. She's doing boot camps, Barre methods. I know Laurent said all the same thing. 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 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. 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, $30, $40 classes at the drop of a hat, organic food, juices, skin care. Basically all around us, there's a big focus on health. Who will invent the future?
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. When we know her, we win. We stay really close to what she's up to, and we create what she doesn't know she wants in the next season. 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. What we're up to is really making her life simple. With work, lunch dates, yoga, run, dinner, drinks, and friends.
With this evolved Ocean in mind, this is where &Go was created. This is where we've innovated into a brand new category. Using our technical luxurious fabrics and created beautiful tailored garments that is exactly what she wants to wear day and right into the night. Just this is really key. All the function and all the performance of our fabrics and all the details of our athletic sweaty stuff designed into street, work, travel. It's exactly what she wants to layer up and layer down with, again, in this super busy lifestyle she has. 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. 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.
Put your hands on the bottom now.
All right. Thank you. I like that turn you guys did. All right, 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, four-way stretch, breathable fabric. This fabric actually is similar fabric to our bathing suit fabric, our swim line, two layers bonded together. You've actually also got UPF in there, so you've got sun 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. Melissa has just come from a hot yoga class. She's got her Boogie Short on underneath. She has an Energy Bra underneath as her bra.
She throws the dress on and really, honestly, I don't have to say it again, but takes her right into night. 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's still got a little bit of moisture on her from whatever she was just doing. Gorgeous bra in the back and a very actually functional pair of run shorts, but we thought looked so beautiful with this top. Thanks, Ali. Kathryn 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. She's dressed so that she's actually rode her bike to her professional job. When she gets there, she might throw on a blouse over top. These pants, again, four-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. When she gets to work, she'll just tuck that little triangle in, throw on a beautiful sweater. It's got the beautiful tuxedo kind of inspired stripe down the side. Again, she could put on a nice pair of boots and head from work out for drinks with her friends. That's it. Thanks, girls. I have my notes here. Hopefully, I didn't forget anything.
Okay, the next thing I'm going to talk about, which we're really excited about, no one's mentioned it, I get to Well, actually, Kara alluded to it, but it's our Fast Turn group. 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 what makes it special is that we're getting technical product to market fast. The team is up to four 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.
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 six to nine months. The other thing they're up to is they use up our excess fabric that we own. Fourth, the team is also paying attention to styles that are trending and selling really well at our Lululemon Lab, and getting them into our stores and e-commerce, again, in 45 days. This is a small, entrepreneurial, nimble team with what I call with big muscles. 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.
We'll look at the product that they built in the video. That's it. We'll play the video.
[Presentation]
We didn't redo it, obviously. We'll bring up the models, I thought it would just be fun to mention that I ran with Laura on the trails this morning, that designers are athletes here at Lululemon is true. We ran for an hour together. What else was I going to mention? I'll show you guys the mesh pieces that you're going to see over the next three months dropping into the store. We're, again, super excited about it. Maybe I'll get you to take the mat off. It's hard to walk through the office right now and not see one of the girls, somebody wearing these tights. We call these our Tech Mesh Tights. It's basically just the block of our Wunder Under pant, then we've just added in the mesh panels.
Again, as Kara spoke to, just adds 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. Then Laura and Kara are really passionate about making sure we get this dropped armhole trend in, then the mesh panels in the back. I'm forgetting what the name of this look is. Then we're over to Nishka here, love this skirt. Of course, it's exactly what you'd want to put on even over a Wunder Under tight, but obviously also a cute little short. The whole top layer is mesh. Our iconic Luon fabric underneath. She's also got on a jacket with a great mesh detail in the back. We're also making sure that we represent that long line bra look in the store as well. Perfect.
Thanks, Nishka. Another favorite outfit. Beautiful, right? 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. Then the pants as well, taking in the mesh all the way down the back of the leg. Great. Thanks, guys. I am also now going to introduce my counterpart on men's, which is Felix Del Toro. We'll have Felix come up.
Great job.
Thank you. Great job.
Yeah, you did it.
Thank you. Oh. Look at this. Thank you. Morning, everyone. Thank you for coming. I'm in a slightly different situation than Deanne, and that is she's been here for 13 years. My one-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. In that time span, I served in eight different functional areas, and lived in three different cities. Most recently, I was with Calvin Klein Underwear, and I moved here from New York City, a little small island. It's interesting because people say, "You're moving from New York to Vancouver.
Why would you do that?" 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. 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, 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. 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. That's an amazing thing to always know.
When people leave at 5:00 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. 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. I am unbelievably excited to be here, and here I am. What are we going to do? 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. 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. Finally, 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? Deanne alluded to Ocean, who's 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. 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 goal-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. 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. What we know today is it's no longer or, it's and.
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 is 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.
When 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. Now we're going to show you a short video. Obviously, we're a big fan of videos here. 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.
Woke up in New York City lying on the floor. Just outside of Moss's West 54th. Wow. You gonna know my name by the end of tonight. Yeah. You gonna know my name by the end of tonight. Wow. Bright lights, big city calling to my-
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 guest. Obviously, I'm incredibly fortunate to walk into the place where we've built a unique business model, where the educators really do engage and have relationships with our guests. When we think about Duke, it's now our opportunity and distinction is as we've built this really strong relationship with her, how do we do that with him? We know in order to do that, we have to think about him differently. We have to engage with him differently. We have to train with him where he trains.
We have to speak to him in his voice, 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, we think as we had so many conversations about it, versatility sounded like a really simple concept. When we paired it with versatility, technical performance, and refined aesthetic, it's something that doesn't exist today. We know that we can build a very strong platform on that, we also looked at two other axes, that is activity and situation. In terms of versatility, he'll be able to use the garments in a variety of situations and activities and also situations.
When you see product in a few moments, you'll see there's product that he can wear working out, he's going to look equally good if he goes to brunch or if he's traveling, et cetera. It really is about embracing his lifestyle. In terms of bringing these three things together, we're allowing him to do more with less. We're giving him freedom of choice, 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. He's not focused or fixated on one single sport he is well-rounded, we had to think, okay, what does he need?
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. We call it sweat, post-sweat, and no sweat. Our goal is to achieve and ensure that when he doesn't want to sweat, he's not sweating. If the models can come out, I'm going to first speak to sweat. 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. 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.
What you see in front of you is just a small sampling of what's in the store for summer, it really does span a variety of activities. I'm going to start with Matt. Matt is wearing the Metal Vent Tee, which is our exclusive It has the exclusive Silverescent technology, which inhibits the microbes that cause odor, because we know that guys do stink when they sweat. I think it's just reality, we're dealing with that, we're helping him deal with that. He's also wearing. He's really dressed for running. The tee is multi-sport, 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. It does wick moisture.
It's four-way stretch, again, he's not supposed to stink, even though he does. Sorry, Matt. 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. 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 whatever he's doing. Thank you, Matt. Thanks, man. Next, we have Troy. Troy is really built for functional strength training.
He's wearing the Assert Tech Short, which has slits 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 four-way stretch moisture wicking to ensure that he really does have everything he needs when he's working out. The tee is also Silverescent 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. Finally we have Tim. Tim is wearing the Silverescent Singlet, which is designed as multi-sport. He's got it paired with a yoga bottom. It does have reflectivity details in the back as well.
If he wants to go for a run after he goes to yoga class, or if he's running to yoga class in the dusk or in the evening, he can certainly do that, and he'll be safe, which we want to make sure that's possible. 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. He's wearing the Luon Short, which is a cotton hand. It's four-way stretch. It has a slightly tapered leg so that when he's doing inversions the boys are still protected and nobody's seeing anything they don't need to see. All right. Thank you, gentlemen.
The next category is post-sweat. 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. How does that layer help him get there? It keeps him warm, 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. The pieces you'll see in this segment are really designed to get him to and from. As we talked about situationally earlier, he can also take these pieces and go beyond that. It really is to give him that opportunity and that choice to move throughout his life. If we can get the next two models, that would be ideal.
I could stand here in silence. We're going to weigh this out and see how it goes. I could take a few questions, tell a few jokes. Luckily, we do have Jordan, and I think we'll have a second model joining him shortly. We purposely blended Jordan. Jordan is wearing the All Current Board Short. It is a lightweight four-way stretch fabric that dries quickly. It's fully bonded on the interior, so no chafing because nobody needs any chafing ever, especially down there. What we did was we thought, okay, 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 Vitasea, which is a premium natural fiber.
It has four-way stretch and again, is really good for wicking moisture from his body afterwards and the Rival hood. Okay. Thank you, Jordan. Tim is back. Thank you, Tim, for returning. Tim is really our post, and he's our to and from guy. He's wearing the Vitasea Tee with a graphic design on it. It's still a great T-shirt, and he can wear it in a variety of ways. The pant that he's wearing, if you'll notice, there's a 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. 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. Finally, no sweat. As Deanne talked about, you get up, you go, technology, and then every morning you hit the reset button. 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. It really is designed so that when he's out there, and Laurent alluded to it earlier, the garments don't wrinkle. Troy is back, and he is wearing the MWV blazer and the Commission Pant. Both of these garments are made with our Warpstreme fabric, which is four-way stretch, and it also wicks moisture. The four-way stretch allows him to move freely. If he does want to hop on his bike and ride to work, he can 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. 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. If you turn around, Troy. There's a reflective detail here, and then the pants have a drawcord so it doesn't get caught in his chain. Below that, he's wearing the Vitasea Rival button-down. Again, this really beautiful, refined aesthetic that he can wear how he chooses. Thank you, Troy. Stretch your head. Now, you could all be scratching your head. Stretch your head was a tagline that we utilize internally. The brand team, when they were doing their research. We really enjoy quotes.
I enjoy them myself as well. They came up with this quote from Oliver Wendell Holmes, and it was, "Man's mind, once stretched by a new idea, never regains its original dimensions." We toyed with a couple of things. I 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. We know that the athlete that we're targeting and the guest that we attract, has those moments, and we're going to be there for him when he has those moments. Thank you very much for your time. I look forward to our Q&A, and please welcome Tara back.
All right. ivivva. You heard from Laurent today about the potential of ivivva in North America. I have many years of running kids businesses. I ran the GapKids and babyGap business. Children's Place. Was also with Children's Place. Then, at Kmart, I had a very large kids business. It took me all of about 2 minutes of walking through the door back in November to see the unbelievable, immense potential of ivivva. What are we up to? We want to create the next generation of powerful women. How are we going to do this? Developing the female athlete. That's how we're going to do it. The ivivva girl, she's an all-around athlete. Studies show 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. We're creating product for all of her athletic pursuits, from dance, yoga, skate, run. The really cool thing that we do in ivivva, 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. They're doing design meetings with our girls while they're visiting stores. For the young girls to feel like they are part of creating this brand with us is pretty amazing. 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 GapKids and babyGap, how important that was, that you have this quality in the product that she can hand down. We're using all of our beautiful, superior technical fabrics in the apparel. We also are using things like our X-STATIC yarns that inhibit the growth of odor-causing bacteria because what I've learned I have two boys. I have 12 and 14. I thought only boys leave their sweaty workout clothes in their locker all week. Well, I guess girls do this, too. Our mom appreciates and understands the value of those proprietary yarns that we use. We could use cheaper finishings as other folks do, but they don't work as well. We only want to bring the best to our mom. What else? How else are we creating the next generation of powerful women?
Kids are more stressed than they've ever been. I know. Again, I've got a 12 and a 14-year-old at home, and I can tell you, when 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. The ivivva 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. Just back here. This image was from one of the showroom openings that was seated in Southern California, seated in 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.
The photo that was taken was taken by one of our former ivivva guests. She had outgrown ivivva, but she had aspirations of being a professional photographer, and we actually use this photo on our website. 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 ivivva. 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 Kaya Lear Marshall, and she's one of our guests, and she wants to do amazing things with her life. She asked if she could come here to the SSC and have a private vision and goal-writing session.
She lives about two hours away by plane, so she came in and had a private session. One of the things that she wants to do, you know how 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, 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. I'm going to have our first two girls come out so we can show them the outfits. This is Kaya, who I was just talking about, and of course, she's in a yoga outfit.
I can't stress enough, we use all the same fabrics that we use in Lululemon. It has all of the high-performance qualities, from her Rhythmic Tight to her DoubleDutch Tank, her great bag with tons of function on the inside, and her yoga mat. That's Kaya. We also have Charlotte today in our tennis outfit. She's wearing the Perfect Your Practice Jacket in our Luon, our famous Luon. She has her tennis skirt on. You want to turn around so they can see how cute that is? Her tank that's underneath is also with ventilation and breathability. Do you want to turn around? For our girl. You guys want to just You can stay right up here. Let's have the next two girls come out. I want you two stand over there. You guys are doing great.
For run, we have Chloe. You can see that she has on our Pace Pocket Pullover with just great ruffle detail, lightweight sun protection hood, and our four-way stretch short, Speedy Short. You can see we took that perforation trend that we talked about and put that into her cap. Underneath, she's wearing the Silverescent shirt that we talked about. I think that's it. Maya, she is actually a ballerina, and she loves ivivva product. She actually asked if she could wear her own ballet shoes today. She just looks beautiful in our Practice Wrap with the great Free Movement Tank. Those are our leg warmers, and then the Rhythmic Tight. Again, all in our high-quality Luon fabric. I think the girls look so beautiful. Thank you so much. All right. Is Natalie here?
Natalie, Paul's here. If you guys would just stand up. Paul, will you stand up? These are the people that have made ivivva happen. I just wanted to introduce you to both of them. Thank you. Time with our guests. 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. The question that we are asking ourselves is: How do we continue to be a leader in the retail community? I have three 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. End to end, we have such a huge advantage. 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.
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. The first thing that our focus is thoughtful market seeding with a community focus and building brand stores. 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. We got better, and now we're actually very good at it. We will open showrooms around the world. We have showrooms international today. We have eight in Asia, seven in Europe. What is really important about these showrooms is that these showrooms allow us time to find the right people
That we can hire great people that share our vision and goals, share our mission, that when we're ready to open a store, we are ready. People is a big part of why we do showrooms. Another big part of our showrooms is understanding the market. 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? We get really, really good market knowledge before we open that store. We actually look at those showroom sales, and our trigger in the U.S. has always been 10,000. 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 million or $4 million store.
We're tracking our showroom sales so that we can get ready for a store. Then it's about seeding our product. It's about finding key influencers, people in the community that are the leaders of our community and athletics, and getting our product on them. 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. It's a big place, that New York, so we weren't getting out as fast as we wanted to. In Hong Kong and in London, we actually have four 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.
Our real estate, we consider our real estate part of our brand story. We use external data, so the demographics, so age, income, education levels, for us to create a full market strategy. When we looked at the U.S., we did a market holding capacity that told us that we could open 300 stores. That wasn't the work. That was what Laurent was speaking to. That was the science. We had to do the art. The art is what we see internally. 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. We use all of our internal data also to match up with our external. That allows us to make smart real estate decisions.
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. 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. When we opened in New York City, we found five of the coolest local New Yorkers that could bring the brand to New York and be our brand ambassadors in New York. We're doing the same thing in every single market. We have people on the ground everywhere that are actually seeding our market in key places.
They share our values, they share who we are as a company, they're up to big things in their life. They're raising the level of health, they're bringing new athletics to the world and to all the communities that we want to open stores. It's a perfect relationship, it's a partnership that we cherish and is a big part of who we are. Global. The one thing I just wanted to say on the community connectors, we actually did this in Asia. We took 10 of our best ambassadors in North America, the ambassadors that have been with us for a really long time, we had them join us in something we called Unroll Asia, we toured all of Asia with our best ambassadors.
What we did was we introduced our existing ambassadors with our new ambassadors in Hong Kong, Shanghai, Singapore. We toured all through Asia, doing yoga classes and sporting events. 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. We made best friends in no time flat. We found, they found friendship together. We built a community of ambassadors. International. I spoke to the global showroom. When we're talking about market seeding internationally, we're not looking at creating a whole new program. It's about building authentic relationships. We do that through our showrooms. Like I said, we've already opened 8 in Asia and 7 in Europe.
We were opening our first China showroom, we were late, we couldn't get product in. Instead of opening the showroom, we decided to do a yoga class. We didn't have any product to sell, we had a lot of really, really excited people. We did a yoga class, 700 people showed up for our yoga class, we didn't sell any products. We have opened that showroom, it's doing fantastic. They were absolutely ready for us. I was telling someone this story last night. I was doing a yoga class in Shanghai, I don't know if I knew where the yoga was in the market, the class was packed. It was one of the best classes I've ever done. The teacher was amazing. I looked around the women were wearing big shirts and men's pants.
I just had this feeling of, "Oh, we need a store so bad." They need our product. 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. If you look at Hong Kong, it has some of the highest rent in the world. 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. This showroom strategy really supports making the right decisions in real estate.
The second focus for us is love our people, love our guests. 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 and his Metal Vent Tech. 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, 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. 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, 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 million store to a $6 million 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. 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. They're paid on performance, so they're driven by being successful and bringing Lululemon to new guests. I was interviewing a regional manager, I don't ever forget how important the entrepreneurial manager is, I was interviewing this regional manager, I asked her why she was leaving. She was leaving a really, really great retail company.
I said, "Why would you leave your job and come to Lululemon?" She said, "It may sound crazy. It's because you let your store managers own their budget." 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." 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, I ask myself every day, everything that we're doing, "Is this going to enhance the educator experience, or does it take away from the educator experience?" We also compensate them on performance as well.
They have team goals that they're all so excited about achieving. 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. I don't think anyone does this, so I'm almost embarrassed that this is what we do, but this is what we do. We have those community connectors that know the market so well. They are incorporated in everything that we do. We listen to them constantly. An example of this is right from the beginning, when we're about to sign a lease on a 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.
We go beyond that. We go beyond that because we incorporate them in the store design process. They actually give us feedback on what the aesthetic is. If you actually go to The Westchester, it's like a very elegant guest, so we wanted a lot of gold and very sophisticated look to it. When we went to Calgary, we have a bull on our storefront because they're cowboys, and they're very proud of it. 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. It's one 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.
It comes from those original, very cool community connectors that tell us what to do. 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. The last one in loving our people is our people magic. 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 are obsessed with technical beauty, and they come to work for Lululemon to wear it and to be proud of it. A big part of our loving our people is we know that when our people are happy, our guests are happy.
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 called vision and goals. It may sound simple, but we train our educators to write goals.
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.
The first thing I would talk about is that we have an advantage that we are incredible educators. Our educators can come in, you come into the store, and they're going to tell you all about the function and 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. We talk about education all the time. Giving our guests really what is our product all about. We know a huge focus for us is to enhance this experience. 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.
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. If it's the Run: Inspire Crop, we can show someone wearing the crop. We can see how the product is performing. This will be the first piece for us. It's so much better than actually having it on a mannequin. We've been testing it, and it'll be 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 five different ways to wear it. 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. Creating a personalized, relevant experience for our guest that ultimately saves time for him or for her. 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. Being able to personalize the experience that people are having. What does that look like? It looks like, for us, that we want to be able to give our guest 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. 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's so much we could do with a 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. Our goal with our product team is to create a localized assortment. When you're in Florida, we have an assortment that 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. Ultimately, we're able to order the full line on our e-commerce site. 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.
The guest profile is critical in terms of where we're going. The last piece of this is seamless integration. You may have heard of it as omni-channel. I heard someone say last night it's the most overused, annoying word. We call it One Guest. Our One Guest initiative is about integrating e-commerce and stores. You'll meet Paul later today. Paul Zaengle is our head of U.S. He actually comes from digital e-commerce world, and the balance of the two of us, store world, e-com world, we brought the teams together. We've integrated into one channel. 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. In next quarter, every store will have that device. We've tested it.
We know what didn't work and what's working. Every store will have that device so that they will be able to go online at any point and order for our guest. What's critical in this is the guest profiling piece, because once we have all of the profile, it'll be such a seamless, beautiful experience for our guest and so quick to be able to do. What does it look long term? It should be that you buy one thing in store, you buy one thing online, and it comes up as one transaction. Everything that we're creating, our guest should never know where the inventory is, what pool it's coming from, who sold it. It should be seamless for our guest.
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. 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. In closing, I think Lululemon's pretty special. After 12 years, every day I get up really proud of not only what we've 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. Laurent spoke to that.
It's part of our DNA. It's who we are. 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 guest. 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 seed more markets. We will treat and pay our people, our managers and our educators, our store people, best in class. 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 One Guest initiatives. We are one retail team with one vision. It all goes back to our guests and our educators. Thank you. Oh, wait. Laura is Laura Klauber.
Good morning, everyone. I'm the closer. The only thing that stands between you and lunch. We'll sort of jump right into it. Just to tell you a little bit about myself, I joined Lululemon two years ago after a pretty long career with Unilever. They're the maker of big global brands like Dove and Axe and Lipton Tea. What I really wanted to share with you today is why I think I have the best job in the world. 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 three years and the New York Subway. 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.
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 have never witnessed such brand love on any brand that I have ever been associated with my career. These were people's personal stories about the brand, their stories about their experience with our athletic apparel when they were working out, their experience, 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 Deanne was just talking about. I must have had 100 notes like that. It actually really just blew my mind.
I really think that there are very few brands that can really engender such passion and such brand love. 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 billion, that all of this was built by just a couple of things, which is obviously having really great, beautiful product, really being built by word of mouth, personal experiences with the brand, and our people, like these really special relationships. 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. That is why the social space is exploding, right?
Brands are diving into the social space in a really big way, and that is 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? For those of you that saw that Skechers campaign that they did about six months ago, they got 62 million views just on YouTube by doing that. It is all in the attempt to create content that is real and personal and that people will share. When I look at what has been created by Lululemon, it is just awesome.
Really what I think the learning is, and that is what all big brands crave, is that the power of a personal recommendation, and it is 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. I think one of the things about Lululemon is that we have really developed a level of trust that is really unparalleled. My question is: how do we evolve and innovate to build brand love? Let us just 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, they really are the foundation of our work in about 270 communities, so all the communities where we have stores. I just featured three here just to give you a flavor of who these people are. 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, she actually teaches a class called The Class, which is a killer workout, and she's blended yoga with other fitness regimens. She actually charges $40 per class, and she has a wait list all the time. Anybody out there taken her class? No. Okay, you need to get on that.
What we did just a couple of weeks ago, TED came to Vancouver, we brought Taryn to Vancouver, and we gave her the opportunity to teach her class to a bunch of TED participants. She really kicked some butt. It was really great. The next person you see in the big photo is Dan Wells, Dan Wells is a world-class CrossFit athlete. He's head coach at CrossFit Horsepower in L.A. He is like the go-to guy in Studio City. We've had a really wonderful relationship with Dan. The top right ambassador, she's what we call an elite ambassador. This is Jamie Anderson. 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 three years.
She's an avid yoga practitioner, she really credits yoga for her ability to perform under lots of stress and tension. What was really great in Sochi, a couple of our folks were on the ground in Sochi, we invited her to the Lululemon House, and it was like a refuge for her. She could come and practice yoga there and really just escape the craziness of the village. Just to give you a flavor for who these ambassadors are. 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. We want to always be on the cutting edge of what's happening in fitness. 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. 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. That's our ambassadors. 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 1,000 ambassadors, these experiences, they help us bring them to life.
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. The other interesting thing is that what we did last year, it could've been incredibly successful, we may not even repeat it and do it again. 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. 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'll probably work. In fact, it did. Here we call it lazy marketing. I was like, "Hmm." I think Deanne was the one that said that to me.
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. Just to give you a view on these. Some of you may have even ran in the SeaWheeze. SeaWheeze 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've participated in by far. It galvanizes everybody in this building.
We had over 40 runners just come from Austin alone that participate in our run club in Austin, we see that with many of our stores. The run clubs in many of our stores get groups of people together, they all come to participate in that for the weekend. When we posted registration for SeaWheeze 2014 on our website in January, we sold out in less than an hour, we think that we could've sold actually 25,000 slots, 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.
We took over the Andy Warhol Seventh Street Bridge in Pittsburgh, we got 750 yogis to show up, 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 event. The bottom right, you may have heard about this before, what does it take to get guys to do yoga, really? Well, that was it. The opportunity to get on Wrigley Field attracted so many men to this event. We did it in 2012, we repeated it, actually, bigger and changed the event somewhat in 2013. In 2012 we had 1,000 people, in 2013 we had 1,500. Super cool event, a lot of men that we hadn't actually brought into the brand before.
If you just sort of multiply these three events times 270 communities, times multiple experiences throughout the year, that is really what we are talking about in terms of creating brand experiences. We still create massive yoga events. We are still doing that, and I am going to talk about a few later in the presentation. We try to always strive to find new and surprising venues. Doing yoga on a bridge is kind of cool. I would like to do it on the Golden Gate Bridge, that is in my goals. Last summer alone, we brought about 200,000 people to their mats. We are also innovating in other experiences. I will just share a couple of those with you. In L.A., we started doing something which was pretty grassroots, underground, not heavily advertised or talked about, called Dress to Sweat.
What we do is we tell people, "Just show up to sweat." Come dressed to sweat. The first pillar that you saw in Felix's presentation. Come ready to sweat, and then you have no idea what you are going to be doing. 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. The element of sort of surprise is just really fun, and it creates 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 successful event. We did something just about a month ago around the NBA All-Star Game. We called it the NBA Yoga Jam.
It was basically yoga-meets-music, and again, leveraging being in New Orleans, it was just a fantastic event. It is always really about trying to innovate and bring newness and freshness to whatever it is that we are doing. Now we are going to just talk about how we create content that inspires and educates and actually challenges our guests, and they love to participate. Not only do we build these experiences offline, but we build them online, and then we amplify them online as well. We have a really passionate community online around Lululemon. Just in 2013, we had about 4 million people that participated 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 up close and personal and to really get a feeling for some of the people that you saw in some of these videos. In fact, the Fast Turn team has participated in a lot of that. The conversation on Hey Lululemon, it is often around, "Can't you bring back that favorite jacket or those favorite pants I bought in 2010?" That tends to be the number 1 thing that people always ask for. There is a lot of just really good conversation around guest questions and even suggestions for our products.
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 million people visit our blog. 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 first quarter of 2014. I think that's because the content is super fresh, and it's really lifestyle-based content. 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.
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. Lululemon, quite frankly, is a perfect fit with Pinterest because that's where guests pin the things they're passionate about and what they love. Pinterest, Wanelo, which is also a curated shopping site, which is also really terrific, and Greatist, which is a health and wellness blog. Deanne touched on this a bit. I think one of the pieces of magic about Lululemon is that we are really a local brand. Right? 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. They help tell us what the community's 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. 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? Our stores know. Our stores know exactly what's relevant and happening in that community. Just to take you through a couple examples, which I think they're great. Is anyone from Seattle in the room? The top right, you guys probably get it. I don't know if everybody else does, but this was in the lead-up to the Super Bowl, and our store in the Alderwood Mall put this window in.
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 avid hockey fans. Hockey butt is back, which was really just like a fun window. 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. In Toronto, our guest goes to the Lake District all summer. Every summer, everyone leaves Toronto, and they go up to the Lake District.
We made a map of the Lake District out of yoga mats, and we have that on display in the store. It's really beautiful, and guests can really appreciate it. 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. I really can't think of another brand that would trust the guardianship of its brand to 270 store managers. When I got here, I was like, "We do what?" Actually, what I can tell you is it really works. It is powerful. 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.
Our guests love the opportunity to engage with our content whenever they can. These are just three examples that illustrate that. 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. 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 it started out strictly as a social idea, but we found that our stores were so excited about it, we said, "Okay, let's enroll everyone." Deanne 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. No Humbug, basically what we did is we gave every store a small budget, and we gave our social moderation team a budget, and they basically just could create random acts of kindness in any kind of interactions that they had with guests or not even guests, and I can just share a couple stories with you. 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 in the morning, it was totally transformed. Those are just some small examples, but I could go on and on. The examples are incredible. The last one we just did. It was called #ifnothing. 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 was just awesome. We had over 1,000 people submit videos and photos of what they would do. My two personal favorites were make out on the top of the Eiffel Tower, which I've already done. The one that I really loved was to travel through Norway on a dog sled.
That one I would love to do. Really exciting. Anybody know about Jimmy Kimmel? What happened with Jimmy Kimmel a couple of weeks ago? 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 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 onto something new. You have to be there, you have to be dialed, you have to be ready to respond. About two 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.
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. Everyone said, "We have to respond. We have to respond." 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 $1,200 a pair because you get lots of use out of them, and that it was out of stock. What happened was Jimmy Kimmel then retweeted what we had done. He has 4 million followers. We brought in I think 100,000 people ended up seeing this just from this one thing. We turned on a dime.
By the end of that day, it was up, they were retweeting. There are very few brands that can do that can react that quickly. In my old life, it would have taken us at least a month. I would've had to get 1 million approvals. It would never have happened. What was even greater was that our stores in L.A. 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. Again, that, I think, speaks to the power of this vertical retail model that we're operating in. The top right, that's Lasha Dellimore. She actually works on my team in the digital space, and this is a little bit of an older example. This is two years old, and some of you may have seen this video.
It was called Shit Yogis Say. 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. 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. Just to give you a feel for where we're headed. 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.
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, Barre method, et cetera. 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. 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. If you're a guy and you come to our website right now, often you'll see just a woman in a yoga pose, and 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. 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.
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 a super successful event. And we're looking to create a lot more events like that. We're also planning to make it personal for her. Deanne talked about this a bit. How do we build a seamless guest experience for her? How do we serve up personalized content that's much more relevant for her? 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 puffy vest if I'm living in Miami.
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. Ahead of traditional retail benchmarks. You can only imagine when we really create this personalized content, how they'll perform even better. More to come later in the year on that. Deanne talked about this, and so did Tara. Inspiring athletic style. We're going back to our roots, making technical product that's absolutely beautiful. Beautiful and feminine. Expanding on the success of our &Go line. We really were the leaders or have been the leaders in the athletic style movement. It was all over the Spring 2014 runways.
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. We will speak to our guests with integrity and humility. What we've launched is a series of videos called "Ask Britt," where Britt 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. Beyond our "Ask Britt" 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. As you know, we just opened our first store in London in Covent Garden. I lived there for the three 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?" My answer is 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'd even have an ambassador in our new store from Barry's Bootcamp. 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 Bootcamp, and unfortunately, I missed all of those. I guess my timing was just bad. Local talent. We recruit local talent for the store, and quite frankly, they're no different than the talent we have in any of our stores.
I could go to a Cincinnati store, a Boston store, 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. They're basically the same, I was sharing this with one of you earlier that we have a managers' conference every summer, last year, we brought some of the team from Asia and some of the team from London and Europe. What struck me was how much they felt like Lululemon. It was no different. Everyone just speaks different languages, but the Lululemon DNA, whatever it is we do to find the people that share this, it was just so powerful.
I was chatting with our community connector from the Netherlands, she said to me, "Oh, Amsterdam really needs Lululemon." People of Amsterdam need Lululemon. This is absolutely, no qualms at all. This, for me, is absolutely going to work everywhere that we go. Of course, we'll have to adjust for local nuances. We know that. The great thing about Lululemon is we listen to our educators. 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, we had about 780 people show up. 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. My friends tell me that we're beginning to see our iconic manifesto shopping bags on the Tube, to me, that is a sign of building the brand. If anybody travels in New York subways, you see them all the time. 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.
There's this huge sensitivity to the local market. In the end, it's really about continuing to build brand love. 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 Sunday Times about a week ago, it put it this way. It said, "Lulu is not about expensive yoga pants." It said that Lulu is actually about tension, energy, balance making a higher impact in the world. I thought that was really great to see that The Times was writing that about us already. 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, it really is our secret sauce. Brand building is not a sprint. It really is a marathon. We're going to go to the video, you're about to see why. Thank you.
[Presentation]
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. We're going to come back after that break, and we'll have quite a lengthy opportunity for Q&A with the full panel of the management team and some tours of portions of the building. 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 boxed lunch for you outside, and if you could grab that, maybe bring it back and eat as we go into Q&A, and we'll try to get started at 10 to 12. Thanks. Yeah. If I could get everybody to take your seats, we'll get started again. 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. The next part of the day, we've got lots of time set aside for Q&A. Laurent will be here for the first part of the Q&A, and then we're going to have small groups that'll go on tours of our Whitespace R&D facility. That'll be led by Dr. Tom Waller, who heads up our Whitespace group. 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 tag, so we'll go in those groups. We'll call you in order.
As I said, we'll give you a warning when Laurent's going to leave the Q&A, load him up at the start. I think before we get going, there's three additional members of our management team who didn't present this morning, and I'd like them to just spend a minute or two introducing themselves. Steve Berube, Allan Smith, and Paul Zaengle.
Welcome. My name is Steve Berube. I am SVP responsible for our global distribution. We have six distribution centers around the world, also our logistics. I'm new to the team. I've been here for eight months now, and it's been the best eight 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 career back in 1990 with Nike. I've held a variety of different positions within operations and supply chain with the Cole Haan and Nike's brand. Nice to meet you.
Hi, I'm Allan Smith. I'm CIO, and I have responsibility for all IT, technology, the retail, e-commerce, supply chain systems, all the things that make the engine and guest experience work. I've been here about three and a half years. Before that, I was at Gap for about 12 years, and before that, about 15 years down in the valley, doing a bunch of different technology things. 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. Having the ability to apply all the things that I've learned over those 28 years to building this brand is just amazing. Again, welcome.
I'm Paul Zaengle. For those of you I haven't met, I joined two years ago and was brought on board to run global e-commerce. Since then, have gone through the transition that Deanne talked about in combining the channels, and now I run the U.S. stores and e-commerce. I also took on ivivva as I was onboarding, which has been an adventure, and you heard about that from Tara 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. I went to Columbia Sportswear in 2008 and did the same thing before I came here. Happy to be here. Love working and sweating with these people on stage.
Before we hand it over to you for questions, every quarter after we have our earnings release, there seems to always be one or two topics that we realize, "Oh, that's really confused somebody," or every meeting I have, I have to answer the same question. Before we set it over to you, I thought we'll just cover two topics that when I was marketing in New York a couple of weeks ago, I think every meeting had these same questions. The first is new store productivity. In honor of David Letterman's announced retirement, I'm going to do a top 10. Now, Number 10, adding mistakes. I confess, I didn't have 10, so I had to throw that in there. Number 9. I only had eight, so more adding mistakes just to flesh out the top 10.
Now getting into the real ones, again, I know all of you try to take our 10-Q and 10-K 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. 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. Number 8, failure to consider seasonality in analyzing new store productivity. Of course, Q4 is a little bit of a bigger quarter. Sometimes we find people will take Q4 and multiply by four, 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 sq ft, it's going to put you off maybe 5% or 10% in either direction. Just watch for that. Number 5, inaccurate guesstimate of exact timing in new store openings. I remember this maybe a year and a half 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. 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. While the store is being renovated, and we're renovating how many stores a year? Maybe 30? Maybe as many as 30.
No, I would guess 20.
Yeah. While they're under construction, of course, we take them out of the comp base and back them out of last year. Again, if you're thinking about that, you can adjust your models for that. Number three, failure to adjust for existing stores expanded or relocated, and therefore excluded from comp base. 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. That's fairly common, and I think most companies probably do that. Unless you're watching for that, again, it'll throw off your calculation.
Number two, and this will be relevant for this year, confusion due to new ivivva or Australia stores because those are at lower productivity per square foot, or Canadian stores because we are adding one or two Canadian stores here and there, and those are higher per square foot. As you look at new store productivity in 2014, remember, there's going to be about 10 ivivva stores in that mix, and they're doing sort of 800 to 900 per square foot. I'll try to make sure that I give you enough data to split ivivva, in particular, out from the mix. 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. A significant amount of our revenue is still in Canadian dollars and Australian dollars, and both of those currencies have dropped against the US dollar by about 10%. If you're not taking that into account, it'll throw your model way off. Okay? As a follow-up, if you want more discussion around these points for your modeling, please feel free to set up calls. The second topic that requires some additional conversation is the whole discussion of core versus seasonal and how that's impacting our business. For that, I'm going to turn it over to Tara.
Oh, thank God. I don't have a fancy top 10 to put up there. I know there's going to be more questions about this after even I answer this. Let me just talk about the dynamics of Q1 and what's going on in the business. There's two things. First of all, we invested pretty aggressively in core. The second piece is we didn't invest enough in the seasonal product. In the core, 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 life cycle, which is all very normal process.
We didn't have the new core to slot in as quickly as we would have wanted to. The entire team is very much focused on reinvention of some of those core styles that are downtrending. We also didn't invest aggressively enough in the seasonal product. Instead of something which is supposed to last for four weeks, it's been lasting about one week. 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 I know you guys are all working on your models, about what's that balance of 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.
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," or, "This is seasonal." They look at exciting product. 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. We just need to get that mix right. That's what's going on in the business right now.
Okay, I think we have a couple of runners with mics. Any questions?
Okay, guys. Is this one going? If you're going to ask a question, it would be great if you'd identify yourself. Right now, we have about 245 people on the live webcast. Now you're part of the show, so make sure you tell them who you are before you speak. I'm going to start at the front row.
Thank you. Adrienne Tennant, Janney Capital. Laurent, my question for you as you've been here is, Lulu'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 think that the speed at which we're launching new categories is actually really appropriate. We're following her and his lifestyle very closely, and the success we've seen with the run categories or the &Go capsule really speaks for the brand strength. When it comes to international, 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. Think about Tokyo, Singapore, Hong Kong, Seoul, Amsterdam, Zurich. We know we're going to have a store. The showroom strategy is incredibly relevant, and as I learn more about it's such a critical part of who we are and our DNA.
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 community. 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, Generally, fashion has carried a higher margin than core. If there's an opportunity for AUR or margin increases on the seasonal product, I'd love to learn about that. 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.
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. Really, our focus right now is when seasonal's running out in a week, that's telling you maybe there's some opportunity around retail. 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 opportunities. Certainly, we're looking at those pieces to it. I think, even in the core, there's always opportunity.
We use 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. As fabrics take 12 to 18 months to develop, we'll be looking at some of those opportunities as well. Okay?
With lead times, I talked earlier about what's really important is building in the multiple pathways. 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. 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 two weeks. It's layering in all the complexity to build our business that we need to do. Yeah. Within this year, we're building that. Yeah. I mean, we're getting to Fast Turn already in 45 days. What else can we do within our supply base?
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 we're working on, the process that we have in-house.
Hi. Oliver Chen from Citi. 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? 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 % of sales going? Less vertically integrated competitors spend a lot of dollars on marketing.
Who is that to? Traffic.
That I want or the baby.
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. 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 in sales, that's really not how we look at it. What we do is so unique, and we've built a movement. 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 TOMS. I mean, that power is incredible. Going to traditional ways of marketing really is not the solution for us. We would lose a lot of our authenticity, working more closely with some of our elite ambassadors and using them in product development, in the Whitespace, sharing those stories, helping them support their goals and visions and their communities, that actually will add to the magic and to the relevance of how we share our voice.
That's for me. I'll hold on to it a minute. Hi, thanks. I'm Brian McGough, from Hedgeye Risk Management. I was hoping that you could articulate for a minute how you trade off sales versus margins. I don't care about the quarter, I don't care about the year, 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 billion to $5 billion company, what kind of margin structure will that ultimately require? 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 think, on our earnings call, we talked about this year being a year of investment, I think to achieve the goals and the volume that you're referring to, a key part of that is growing our international presence. Part of that investment really being building the team in Asia and in Europe that has that deep local market knowledge. That's the investment we're making this year, that will unlock the potential to growing in these countries. I think long term, the goal is to maintain the margin structure that we have. Clearly this year, we're building both that Asia, that European platform so that we can continue our rollout.
Okay. Hi, 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? 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? What's the mechanism that you will use from that perspective?
I'll take the first part about organization, and then I think the second part sort of goes to Tara. 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. We're aligning the teams organizationally to actually be more nimble and more flexible to support design. I talked about really building the teams. As part of the area, resources lagged behind, that's just natural when the business booms. 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. My vision is to be able to follow design with whatever they need and how we need it. 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.
Okay. We should pass it down to you. It was an outlet question.
Outlets.
Yeah.
Can you repeat the question? Oh, do you have the mic?
As you increase Fast Turn through seasonal, will you prepare it in an outlet store, meaning 12 outlets will be done in-store or?
Yep. Yeah, I think a big part of our markdown strategy right from the beginning was not training our guests that we mark down. 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 seasonal color is in a different season, we also don't feel like we have to mark that down. When we look at our markdowns, we have a healthy percentage that we mark down in store, we do use our outlets to exit the rest of the product. Our outlet strategy is based on how many stores we open, based on how many stores we have per outlet, that we can exit some of the excess inventory that we may have. 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 three days, it only lasts for half a day. We were out of inventory. We don't design for our outlets, we're not trying to drive business to the outlets. We believe in our product and we believe in the technical piece of it, we don't need to mark it down. We'll stay with that course.
Even as we increase seasonal?
Yes.
Hi, Dorothy Lakner, Topeka 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. Then, I guess, specifically also, I think Deanne 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 timeline for getting to that?
I think from a technology standpoint, I mean, you're going to see the investment we're making in the Whitespace, 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. I think a key element of what we're doing as well is how we are organizationally structured, where you've got designers and R&D engineers almost peer, and you've got that healthy tension, right? There's no way you can compromise the integrity of either. It takes me back to the snowboarding days where we build a U.S. Olympic uniform with a vintage denim that was three-layer Gore-Tex. It's when you achieve that balance that you really create something that's unique. On the technology front, I think that what we're going to show you will speak for itself.
The second part was on.
CRM.
Yeah. We're making a lot of investments in what we call our core foundation. We're making investments, supply chain systems, planning and assortment, so we can do localized and regionalized planning. Making investments in 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. 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 in really defining what that guest profile looks like, and then how we link it to point of sale, e-commerce, and all the rest of our digital experience through the stores and online.
Hello.
Hello. Dustin. Paul Lejuez, Wells Fargo. Laurent, just curious, who specifically do you look at as your primary competitors, biggest threats? Does your answer change when you think about core versus seasonal product? 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 have vertical models, some of them don't. I mean, some of them have been in the market for a while. I think as a leader and as a creator of this market, 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've seen that in the snowboard industry very clearly, where we led for so long. 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. 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 billion 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? Then to Laurent, kind of tying in 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. 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. I can't reveal them now, but what 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. As we have this model that is so grounded in ongoing dialogue with the guest, really understanding where they're going with their activities. We're going to make sure they have the gear to get them there. We will continually build upon that, and we will build out what we have today to explore new categories for him.
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. We don't necessarily have to follow the same path than we had to follow in North America. The second question was Oh, scarcity. I'm a huge fan of scarcity. We measure the success of our product by the velocity at which we're selling product at full retail. We've made our guest starving. We don't want her or him to be starving, but we certainly don't mind them being a little hungry.
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, et cetera, today, you focus a lot intensely on yoga. I was just wondering, as you accelerate growth internationally, how do we think about building brand awareness for other categories, product categories? Thanks.
Honestly, I would look at those markets, and I would have the same response that I had for the guys. We have an opportunity to enter those markets with equal excitement. We're going to be deeply rooted in yoga. That's where our DNA is, that's where our roots are. We have an opportunity to enter those market with a broader assortment. Do you want to add anything to that?
Yeah.
I think one of the things that's important is those community connectors that we hire right at the beginning. One of the things I might not have said is we also really get underneath of what sweaty activities they're doing. When you Say, when we went to Kansas City, I had no idea the running community there. 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. 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. That's it.
Yeah, that's great.
Christian Buss, Credit Suisse. I have a question for you, Laurent. I'm 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. 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.
Anyone? We're not giving long-term guidance, right? What we said on the earnings call sticks.
[audio distortion]
Yeah. 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 two years. It seems to me like some targets for longer term growth and longer term margin potential would be appropriate. Any context around that in the context of two years of challenging earnings power would probably be useful.
Right. Okay. Starting with top line, I see us getting back to positive comps. There's lots of positive comp productivity in the U.S. market. Of course, as we enter international markets, they'll, like the U.S. did, start low and comp positively. Productivity increases. We're only about two-thirds built out in the U.S. We'll probably be finished that build-out in three to four years. Over that timeframe, we'll be ramping up our international store count
growth. Again, without giving specifics, I see it taking two to three years to get up to a run rate. As the U.S. is built out, you'll probably see new store growth. It's somewhere in that 40 to 50 store range that you've been seeing as we build out North America. 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 Sterne Agee. I just was wondering, what you were doing with the return policy, number one. Number two, what is the timeframe 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 timeframe that you see for that, 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. Being incredibly guest-centric and returning to those incredible experiences is key. With every brand that grows very quickly, you end up putting policies in place that sometimes are overly protective of the brand, 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. A lot of the discussions that we've had with our store managers has really been, if you make a mistake, err on the side of delighting customers and really delighting the 99% of our loyal guests. Our five-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 implementing those international locations, it really goes back to having the right team on the ground. Building the right team in Asia. Ken is here today. I saw him earlier. He's on his way back to Hong Kong. Christy is in London. Once we have these two teams in place, there's no point in running until we have these teams in place. 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. We need those teams in place to really understand the market and bring the Lululemon DNA to those cities.
The reality would be like 2016 at the earliest, really, to get it going. Next year would be a learning from a different place and following.
We'll have some stores in 2015, but you're correct.
Thank you.
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 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. We're going to start with these two rows, the front rows here, just to the middle, and then we'll come back, and we'll do four of that grouping. If you want to head out the back door, Tom Waller's standing at the back, and we'll go on the tour. You can leave your stuff. Leave your stuff here. You're coming back. Go, you'll be right back.
Off you go. That way. That way. You're going to see a tour of the R&D facility downstairs in the building.
Okay.
We're back on.
Stacie Rabinowitz from Consumer Edge Research.
Oh.
Sorry. My question's 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, 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, I'll let Deanne also talk about this as well. We have a very talented design team here. What we're doing right now is mostly focusing D&I 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. 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.
Jennifer and I talk a lot about, as you think about when you have that 20% being generated from the market, maybe you have a small, tiny design team there, it's how are we building the infrastructure below that with technology to make sure that we're getting all of that amazing intelligence back into, as I call it, the mothership. You saw a lot of global brands, they've kind of done this pendulum switch. They went really heavy in market with design teams, where all of a sudden some of these global brands, I don't need to name them, 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's 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, we do need to set up fundamentally the systems and process in order to support that so we can take full advantage of it, because I'm envisioning we're going to get some great innovative ideas that we're going to be able to maximize. How you're going 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. It's already implemented, but some of the things that Jennifer and I are looking at is what is a streamlined process from the time of an idea to getting it in the store. 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.
That would be an example of that. Okay. Hi. Right here. Rebecca Duval, BlueFin Research. Jennifer. Right here.
Hi.
I know you've been busy, implementing a whole QA process. I'm wondering a couple things. One, do you feel like you have a normalized, consistent product flow now, or is there still an onboarding at a factory level? 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 more global sourcing strategy, identifying your top 10 vendors, and some sort of timeline when you think that will be contributing to your IMU?
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. 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, be more meaningful to them so that they can then help us deliver the product. The end stream is not actually my huge focus right now because I feel it's in a really good place. It's upstream, 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. 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. 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 see some sort of timeline on that?
Am I talking IMU?
Yes.
I'm not talking IMU.
We're not commenting on IMU for-
Conceptually.
Conceptually. Okay. 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 guest-- Because at the end of the day, we want to give the guest what they want. We're looking at the opportunities with 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 Wunder Under. We have beautiful, expensive textures in those fabrics that are coming in in the back half.
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, the price-value equation. 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. 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 in to deal with us when we're being clumsy.
This is a question for Deanne. 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-- 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. I think one of the biggest things that we did is what Laurent had spoke to in the opening, bringing back our five-year promise. We lost that somewhere along the way, and the five-year promise means that we guarantee our product for five years. 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 my perceived perception of the quality of my garment is we return that no matter what. 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. I spoke a little bit about the handheld devices that we had in store. We were able to do mobile checkout over holiday, where it really helped in our high-volume stores. I spoke to one of the stores doing $2,000 a day. We timed those cash lineups. We're super on top of that. That mobile is also a big part of it, being able to do the checkout.
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.
Yeah.
Thanks.
Thanks. Brian Tunick, JPMorgan. I guess when you look at the tough back half of 2013, we were wondering was it more about the Lulu loyalist or the new customer potential that you disappointed? Which of those, the loyalist or the new customer, are you most excited to build the business on in the future? Maybe John, I think at ICR, a lot of discussion around the balance sheet opportunities, and we thought we might hear something by now. What's the timeframe from either a share repurchase program or a potential dividend or some use of the balance sheet? Thank you.
Thanks, Brian. Want to do balance sheet first?
I'll do balance sheet first because I can never remember two questions at once anyway. Yeah, in terms of balance sheet, we have now over $700 million 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'd be a press release. 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. 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? I've also mentioned this in the past.
One of the things that we're still trying to get past before we can really move to a decision is, I'm sorry if I'm getting technical, because the public company is a U.S. company and the Canadian subsidiary is where the brand was invented, all the IP resides. A lot of our cash flow gets generated in the Canadian subsidiary. Our strategy has been to use that cash to fund our international expansion. Europe and Asia, corporate structure-wise, are happening beneath Canada. If we changed our strategy and took the cash from Canada and dividended it up to the U.S., there's actually an additional tax hit. Still working with lawyers and accountants to figure out if there's a way to minimize that. If there isn't, maybe we'll just have to make a decision.
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-
Okay.
Your first question about loyalists versus new guests. I would say we care about both, but probably first and foremost, that we care about loyalists. People that have been loyal to the brand, that we don't want them to be alienated, and we want to keep them loyal to us. What I can 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 the U.S. by anywhere from 10-20 points. The guest who is passionate about our brand. People that are already familiar with our brand, I would say, would be our first priority, and the new guests, 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. I think it's current guests who are 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? 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? We have gone very slow. In the background, there's been a lot of legwork being done to do all the strategic research behind 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's 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 &Go, recognizing not wanting to give any forecast, if you could give us some kind of directional potential for &Go maybe two years and five years out, so we can get a sense about the business. Then on e-commerce, I don't believe we're in all these markets that Laurent 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.
The &Go, again, we're not sharing any forward forecast. We're excited about the potential of the category, we're going to continue to perfect and experiment with it and innovate from it. We're not ready to talk about what % of our assortment that would be. Then do you want to talk about the e-commerce by market or-
Is it on? Yeah, you guys can hear me? We absolutely do that. Not only are we seeding markets first with e-commerce before showrooms, 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. We actually look at where those sales are coming. I think we're on that. Right now, we're shipping to about 90 countries and some local now, we have local fulfillment in Rotterdam for Europe, in Hong Kong for Asia, then the rest we fulfill out of the U.S.
Thank you.
Hardy Bowen , Bowen Associates. When looking at the Canadian stores, how do you analyze the seasonal versus core product? Is the seasonal product where it was in 2012? 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?
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 coasts 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. Again, it's just about 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 it's trending more similar to 2012, really that's what we're reacting to.
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, 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, when does that come? Which season will it actually begin? It's been in the works, and we're working through it, I know, and building the systems and so forth.
Yeah.
Is that spring of 2015 or-
I could answer but-
-fourth quarter 2015?
Since Allan's here, I'm going to take advantage of Allan being here, and he can answer that.
We're targeting fall of 2015.
Thanks.
Laura Champine, Buckingham Research Group. 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? I guess from our perspective, we look at all the new real estate. Including expansions, including ivivva, including Australia, those are all places that the company's putting capital into, which drive the future profitability and returns going forward. We wouldn't exclude all those kind of things. We would include that. 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?
What do you think for 2014 we should be modeling in terms of productivity and new square footage, keeping in mind we're adding 10 ivivva stores into the mix?
Starting with how have new stores done most recently. I look at it a variety of ways. I look at what's the year one 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 $1,250-$1,300, 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? I extrapolate out. Again, I get a similar answer for the stores that are still less than a year. The other way is each quarter, I look at what is the actual productivity against the productivity of the comp base. Again, if I look at Lululemon stores primarily in the U.S., it was about, I think, 68% in Q4.
Over the past six quarters, it's been more in the mid-60s. 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 ivivva. I just think it's important to break it out and look at each one separately. ivivva, as we've said, 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. I would expect the new stores that we're opening to be sort of $750-$800, and then to catch up to the comp base. Australia is, again, in Australian dollars, AUD 1,000-AUD 1,050 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. I think there's a lot of opportunity for increased productivity in Australia. We'll see that going forward. Canada, again, we're not opening many new stores.
I think at a very mature level of just under CAD 3,000 per square foot, we can comp flat, maybe low single-digit positives. The biggest factor in terms of the drop in reported productivity, depending on how you're calculating it, was my number one reason. It's the Canadian dollar. A store doing CAD 3,000 per square foot, a year ago, that was reported as $3,000 because they were at par, but that's now $2,700. 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, of the $700 million in cash that you have, how much of that is domiciled in the U.S.? 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?
Yeah. I don't know if you know, Chris. It's probably $100 million, give or take, is in the U.S. It's primarily in Canada.
My questions on the international expansion. I think you said after the U.S. is built out here over the next three years or so, that you would expect to be able to maintain a new store growth rate annually of 40-50. Obviously, some of that will be ivivva. In terms of just the Lululemon expansion, what kind of seeding of new markets needs to be done over the next one, two, three years in order to allow the international Lululemon store openings to comprise the majority of that 40-50? Do you think that that's actually an achievable number given the complexities of international real estate?
Yeah. Again, we've already got the strategies in motion, 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 seeded so that as we get two or three years out there, we can hit the kind of pace that we talked about. Again, it goes back to Laurent's comment about not being so sequential. 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's doing its work and not too far out, we should be looking for a store in Munich. I think all of the pieces are there.
Of course, as we get a presence in a market like London, we can start opening stores much more quickly. 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. I think London will quickly become that, so that'll allow us to accelerate as well. Okay.
We're ready for group 2. This is our group 2. First two rows here. I think I should come and see you at some point.
Yeah, come. Okay, we can just keep carrying on with Q&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 the pieces are falling into place from a sourcing and manufacturing and operational side to meet that demand? 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. Yeah, I feel confident we have that in place.
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 billion-dollar number and getting there in a few years?
We're confident. No mic? I was confident. We're confident because Our goal and what we're doing today is giving him something unique. I think that we have some very formidable competitors. I have a deep level of respect. Certainly worn their product in the past, and they'll continue to do great things. I think when you have good competitors, it makes you push that much harder. 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 the sort of unique conversation you have with the consumer. 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 a relationship where there's an elephant in the room. We're not talking about that thing anymore, but she's still holding a grudge. How do you overcome that?
Sure. I think with our e-commerce guests, it's a bit easier because we have a direct sort of relationship with them, we're looking at ways to reengage some of those guests. I would say, we're beginning to have some conversations that I think need to be had, right? 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. It's really all the yogis that live in New York that participate in that panel to really have 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. We're planning to continue those conversations over the course of the year if they're needed. That's just one step.
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. It's about how do we bring those stories to life in a way that so our guests really begins to really understand who we are and what we stand for. We probably haven't done the best job in explaining that.
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? Also within that space, how would you contextualize the competition? If there's any brands outside of the space in general that you really admire.
Because the business is so small at this point, obviously, it has been, We look for future growth, we're deciding what we want that tops-to-bottoms ratio to be. We're not finalized with the numbers yet, We do believe he definitely is going to buy more tops than bottoms. The tops number will absolutely be higher, because you can also wear them, and we encourage him to wear them for activities outside of athletics. 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.
What I mean that is really sort of looking to trend, whether it's fashion, health, lifestyle, economic trends, understanding the world around us because we don't necessarily look to a brand specifically, because we are creating something unique. It's really taking a variety of inspiration and blending it together.
Sorry. Sharon Zackfia with William Blair. I've been holding this mic for a while. 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 15% was the long-term target. You're above that, You still have a very limited assortment online. 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. What is the gating factor at this point to having more robust inventory content online? Then where do you ultimately think e-commerce goes as a percent of sales?
Take that. We don't have a limited assortment online. The challenge is that it's selling out really fast right now. 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. There's a natural swing there, which is put more online. We're approaching 20% of sales. I think we're at 18 this year is what we're thinking. 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%. 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. In stores, what that looks like is the handheld device that Deanne talked about for now, and that'll evolve over time.
She can walk in, he can walk in and walk out with two items, and one's being shipped to their house the next day. The fact that we're paying our stores on that's a game changer. 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 timeframe 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? 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% currently that the men's mix is?
It's a whole bunch of questions in there.
I'll start, Laura, Felix, anyone can jump in. I'm going to go backwards because your last question is freshest in my mind. Men's, yes, we know that women are buying men's product online. I think our men's registration number is probably less than that % of sales, but climbing fast. It's the fastest-growing part of our online business, it's working. Repeat the first part of your question.
Well, looking at the Lululemon anywhere, as you brought that online point of sale, if you will, into the store.
Yeah
was that just furthering a relationship in many instances that you already had with that 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. I would say we just exited our pilot program. We're just now getting into rolling it out to all stores. 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. We're three months in. We're headed there fast. Allan's team's doing a great job in getting us there. 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.
Oh, yeah.
So-
All of that
yeah, I would say we're not rushing into personalization. I think of it like our stores. 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. They know what you like. They may know the makeup of your family. We would love to replicate that online in a non-creepy way. The things that we won't jump into right away is what you experience online in retargeting and 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. Deanne says this really well.
What we want to avoid with personalization is we're the place where you can go to find out what the coolest, newest workout is, and we want to make sure we maintain that we're actually sharing with them what else is out there, not just what they're always participating in. We'll figure it out, we're really excited. We've done some tests, we're headed there quickly.
Betty Chen with Mizuho. My question's regarding ivivva. Sounds like obviously you're very pleased with the sales productivity being around CAD 800, CAD 900 per square foot, which is a great number against the industry. 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 seeding the market to figure out where you should be opening the stores? Then how we should think about the four-wall on those stores relative to the Lululemon brand. Thanks.
Yep. I'll take it. We're seeding the market with the same methodology we've used for Lululemon, which is showrooms. We're opening 10 stores this year, but we're actually opening 25 showrooms. We're in 25 new communities. The seeding 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. That's our showroom to store strategy. Then from a productivity perspective, yeah, we're five years into this journey, it's a big Whitespace for us in terms of ivivva, there's a lot more we can be doing in those stores. We're really excited to see the productivity at the number it's at already. Does that answer it enough?
I think it's probably too early to get specific, just conceptually, the productivity is lower than Lululemon, very strong. The IMU is less. I don't know if you want to comment on that, there's more sensitivity, I think, for pricing of children's wear. The gross margin's going to be a little bit lower. Again, without taking it further and saying then the four-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&D center, so from this row back. Just head out, follow Mary. Head out down to the facility, and Tom and Laurent will meet you there. Deanne, a question.
As you think about the capsule collections, how many other capsule collections should there be? How long should they last? Jennifer, on the sourcing side of manufacturing, where are you in terms of getting to a merchandise margin that you'd like to see? Are you at the manufacturing capacity level that you can get there, or are you still building those relationships?
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. As we think that through, how do we strategically build out a category, right? Because capsule to me is 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. 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, thinking those things through.
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? 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. 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 our 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 ratio of new customers to the brand versus repeat customers to the brand is, and how that's evolved over time? 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 address. 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.
Yeah
of a number. We are just over half in terms of new versus existing.
When you say that the same store
We don't collect.
Yeah. We don't know.
customer data at the stores yet, 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 was me or Laurent made a comment about we expect to maintain margins, 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'd have a, call it, a mid-20s operating margin. 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 Turn program. Just wondering if you're able to share what % of sales currently comes from the Fast Turn, just how much you think that could grow over time, how do you see it evolving over time? Thanks.
I'm not going to share what that % is right now. Let's just say it's a very small %, both Deanne and I feel like it could be a much larger % of our assortment. That is one of our focuses is really building out a strategy for the Fast Turn group in partnership with the sourcing group. That's a lot of work that's being done currently.
Hi, Corinna Freedman from Wedbush Securities. A few questions. I'm not sure if it's been asked already, 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 because I'm like, "Oh, this one's not for me," but they're saying, "Take it.
Just on your demographics now?
Yeah
How they might have changed over the last 14 years.
I wonder if I should go here, when we did disappoint our guests in 2013, the ones that really stuck with us and said, "That's okay," was our core guests. Our core guests didn't change at all. As we continue to build trust and beautiful product, we're going to gain all the guests back, let's call it back, that the core guest influences. We haven't seen a shift at all. We've seen actually an increased loyalty in that target guest. If that makes sense. Is this on? Don't say anything. Is it on? We design for a late 20-year-old, early 30. That's who we design for. I witnessed being in other companies where they aged with their guest, and you don't want to find yourself in that place. We are very clear that we design for a 30-year-old.
Next question. Is this on? My next question is I'm drawing a blank about the bottoms trends. They 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 leg?
Bottoms. Would you say you're seeing a crop look kind of trending?
Yeah, we've had the same sort of silhouette on bottoms in the athletic for the last-
Yep
two or three years.
Yep.
Are there any changes?
Yeah, 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. We've been working on it for a while. Is that Yeah.
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. 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? Also, it seems like the way that you introduced &Go, that it maybe had more of a life than just that first surge that sold out in two days. Where is that going?
I think we're at an interesting stage in the industry. You have a lot of merchant and planning organizations that either came up through brick and mortar or came up through the digital side. 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 sq ft 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?" That's basically your wallless store, right? Your online store. As you get more sophisticated, as we get our new tools and systems in place, to really be able to allocate and assort really effectively by region. You almost use that online space, as you will, as the holding place for these different ideas.
Depending on what part of the country, and as you heard Deanne 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. If you're finding in a country that yoga's more important, you may amp up an expanded assortment that may exist online in that store and maybe shrink another one. It's just really starting to drive that shift in how people think about and how the merchants think about assorting the store. Some of the restructuring we've done is that now the merchant owns how they're assorting. They're really thinking it through what's going to just maybe be online and what they're going to put in store.
It's a big shift we're going through right now, but we're really excited about it. As for the &Go, Deanne 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. We already have that coming back in for fall, and it'll be in all stores.
Okay. Does anybody in this section have a question? You're just about to go downstairs to your thing. Okay. Yep, hang on. Janet.
Yeah, I can talk loud. I just wanted to ask, as far as marketing for the online channel, are you reaching out 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? I had another question, and I forgot it, but we can do that. Maybe it'll come back. Go ahead. Yeah.
Laura, you want to take that? That was all marketing. Yeah, go ahead.
We actually have our weekly email that many of you may receive that goes out every week when we drop new product on Monday night. That's our primary vehicle to communicate with guests, to let them know what's new in both stores and in e-commerce. I would say that's our primary vehicle, then we use our social channels to communicate what's new constantly, right? Whether it's to feature the &Go capsule or whatever it might be. I would say the email is probably the biggest driver of traffic, both to e-commerce and to our stores.
Success of the online channel and its rapid growth, does that influence your store opening strategies at all? In other words, 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, you remember back at the IPO, we talked about 300 stores in the U.S., 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. I think that's where it's influencing our store count. We're still talking about 300, 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, I do think 300 plus e-commerce is the way that has evolved.
Deanne, when the customer buys one piece online and one 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.
Yeah. 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. Yeah.
Okay. If I can get the back half of this group to come out and just follow here, we all go downstairs to see the R&D facility. 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. 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. From the technical aspects. Did you take the tour in the Whitespace 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 Do you want to talk to this, Tee?
I want to de-leverage our vertical model because we do go out to all of our partners, and we say, "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. 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 talk into our guests and see what their urgent needs are. 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. It's our magical little thing. Yeah.
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. You're growing international now. You have 200 stores or so. How does that evolve and change?
Yeah, we're talking about it. We were just talking about it this week. I actually personally run that call, and with Felix. We're reading over at least When it all culminated with our showrooms, with our wholesale accounts, everybody's giving us feedback on product into this one call. We're reading almost 300 line items, it is getting bigger and bigger. The value of us reading it ourselves versus a system possibly filtering it for us is obviously really high. We're just looking at how we're going to scale it, exactly like you said, how we get bigger. 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. We don't have the answer, and we do need to scale it.
Thank you. Hey. Hi. Delaney, I have a question about the store manager compensation, which you mentioned a couple of times. Also you highlighted the entrepreneurial element of letting the store managers make decisions at the store level. 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 there's broken assortments or something like that. They also can merchandise a little bit differently from store to store. 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? Then as along with the compensation, obviously, it sounds like you bonus them based on a sales figure.
Do you also bonus them based on 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, they can figure out the how. I think that we make mistakes, we have to be okay with the mistakes that we're making because ultimately, our wins are so much bigger. 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, I actually wouldn't want to be a store manager because our windows are so fun to generate excitement. We give them the why we do it and some guardrails let them create.
Ultimately, I think we've had a few failures, 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. It really is about the discipline, about letting them run their business. The other thing that I think is really important, I did mention it in my talk, just about them owning their budgets. It's also them being able to be part of the giving back. They run their budgets, they can figure out their giving back and what they want to do for their community. They're really making decisions for the overall business and health of their business. I think that's really important, too. There's so many little pieces that they're responsible for, and we give them the guardrails for that.
In terms of for their pay, their pay is based on there's a few levers 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, meaning that if they were to take extra markdowns to hit their top line, we don't over-manage them on that, they have actually a percentage of markdowns that they can take within a store. It's not like they're just fully bottom line. They get the profit from that, we still manage them from the top line with a couple managing their labor and managing their budgets. They can actually make decisions within it. Again, we give them guardrails around markdown.
If we say that we want them within an 8%-10%, they have to fit within that, they can't go above that markdown.
Do you 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?
They have a tool that they can use. It allows them to see based on what we're projecting or their forecast sales are. It'll tell them how many people they would need to staff for that and how many hours they get. They gain hours by over-performing. They manage within those hours.
Thanks a lot.
Hi, Camilo Lyon from Canaccord. John, this question is for you. Tara and the team, they've spoken a lot about the structure that they've put into place, commercialization, seasonal calendars, and the like. What kind of visibility does that work give you that you didn't have before in your budgeting process, in your planning process? When do we start to see some of those positive benefits start to materialize?
Okay. I think visibility in our budgeting process is different than what are the benefits. Let me focus on what are the benefits. Again, 2013, 2014, and to some extent 2015, you're seeing the investment to develop what they've been talking about. Again, there's all sorts of benefits to gross margin once we're into sort of late 2015, 2016. I talked about the ability to maybe get better pricing from our suppliers. More efficiency in the supply chain will reduce air freight, will reduce fabric liability, which is what we're left with if we cancel orders late in the game. 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?
Yeah. It does. 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? 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's wearing the same outfit in the gym. Can you just help us understand how that evolves? Are you just ultimately making larger merchandising bets and risks in it?
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, when they're doing their plans and setting their plans for the quarter, they're already planning into significant amount of markdowns. The amount that you just flood the market with product, that people get trained that they don't need to buy at regular price. 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, that we have opportunity to just step back.
We've re-looked at the fall buys and the holiday buys just to make sure if something's intended to be on the floor for four weeks, that we can satisfy, we obviously don't want to disappoint a guest. I also think one of the really important ways we drive traffic, 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? It's just so brilliant that they want to come in and see and touch and feel and experience our new product every month. Also that they know they can go and do a gym workout, and they're not wearing the exact same thing that everybody else does.
I also love the scarcity model because it keeps pushing us to have more innovation, is to outdo ourselves than the last time. Do you have anything else you'd elaborate on?
Felix, to get to $1 billion in sales, what role do you see men's-only stores playing in that goal? How do you see the store footprint dedicated to men's transition over time?
As Laurent alluded to earlier, 3 stores this coming year, one in Vancouver, one in Santa Monica, and one in Miami, will have dedicated men's spaces. The store design team, in working with the community connectors, really understanding what he's looking for. I think what we will deliver is this brand experience. As Deanne pointed out, it really is specific to the community. Then now, as you look in that box, how does the gender variance sort of modify the experience? 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 space might be a little darker, hers a little brighter. The brand feels consistent and cohesive, so the guest can go from one space to the other, and experience and engage with the brand.
In terms of future growth, we have 240 stores today where we have more opportunity in men's. We definitely look to open men's stores, but in terms of optimizing and getting to that $1 billion 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, et cetera. Again, maybe one more question, then we'll wrap it up.
Thanks. I just 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, et cetera, to your group to effect what it is that you're trying to do over time? How are they taking to it?
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. We're really looking at lining up with design. I talked about raw materials being more expertise led and really driving and owning that. Our product development teams and sourcing teams and quality teams are all aligning to the pods. Instead of them being one big group, they're in their small groups and can really connect with their design partners in that way. I think that keeps it You can have an overarching process and things that we need to at least stay within the guardrails too. 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 4:00 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's actually going to show itself tomorrow, so I hope you have a great weekend. Again, thanks a lot, and we'll talk to you in June when we report our first quarter. Thanks.