Since When Was “Innovation” Not a Focus at LULU?
At the ICR Conference in mid-January 2012, LULU management was quick to point out that the company’s top-line success in Q4 2011 was related to (1) higher levels of inventory and (2) additional innovation/color.
Historically, management believed that inventory constraints limited the amount of ‘innovation’. Per management, the increased fabric ownership in Q4 2011 allowed the company to provide more color and choices that were not previously offered… and, much like the apparel landscape in general, color became a material top-line driver at the chain during Q1 2012.
But, the ‘story’ seemingly changed this week. On this week’s conference call, LULU management suggested that it was no longer interested in building inventory to “chase sales”. Instead, “innovation” has become the company’s focus. Since when was “innovation” not a focus?
Last quarter, LULU made the following statements during the Q&A session that may be contrary to some of the comments being made today re: Innovation vs. Chasing Sales. What happened to the “partnership” with mills and the “bigger inventories of fabric” that were designed to increase innovation and responsiveness (i.e. “chase sales”) simultaneously?
“So, comp drivers are mainly newness, that innovation that we’ve talked about.”
“We’ve brought on some additional factory capacity. So, the main part is the partnership with the mills that we work with and working with them with innovation. And, we’ve also frankly held bigger inventories of fabric, which has allowed us to have more choice and responsiveness.”
