Beast Finance has learned that Lulu's Fashion Lounge Holdings, an online retail platform for women's apparel and accessories, plans to sell about 5.8 million shares for $16 to $19, raising about $100 million at the midpoint of the expected pricing range. The shares will be traded on the NASDAQ under the ticker symbol LVLU, founded in 1996 and headquartered in Chico, California, USA, and currently employs 744 full-time employees.
Corporate business
Lulus is a customer-driven digital homegrown fashion brand that primarily serves millennial and Gen Z women. The company has more than 7.5 million followers on social media platforms, up from 5.5 million in 2020, with the popular #lovelulus has generated billions of impressions. Consumer surveys for 2019 and 2021 showed That Lulus was significantly better than its peers in terms of net promoter score, customer satisfaction, overall value, and likelihood of repurchases; these metrics showed that customers had a true affinity for the company's brand.
Lulus sells thousands of unique products in different categories every month, and in the six months ending July 4, 2021, 70% of sales came from reordering and 94% of reordered products were sold without sales pricing. In the six months ended June 28, 2020, this proportion was higher than 66% of reorder sales and 89% of reorder products that were not converted to sale pricing.
During the 12 months ended October 3, 2021, the Company served 2.5 million active customers. In the first six months of fiscal 2021, 88 percent of sales were Lulus brand products, up from 86 percent in the first six months of fiscal 2020. The company's target customers range in age from 20 to 30s and beyond. The company's luxury positioning is to make more people affordable, manifested in the company's average retail price per unit (Aur) of less than $50, making the company's products very accessible and attracting a wide range of market segments.
Financial situation
For the three months ended October 3, 2021, the Company expects net income to be between $3.3 million and $3.9 million, compared to $400,000 for the three months ended September 27, 2020. From the three months ended September 27, 2020 to the three months ended October 3, 2021, the expected increase in net income was primarily due to higher gross profit, partially offset by higher selling and marketing expenses, general and administrative expenses, and higher income tax provisions.
For the three months ended October 3, 2021, the Company expects gross margins to be between 47.3% and 47.7%, compared to 44.8% for the three months ended September 27, 2020. From the three months ended September 27, 2020 to the three months ended October 3, 2021, the expected increase in gross margin was primarily due to price cuts and discount reductions driven by increased customer demand.
Industry overview
Consumer market research firm Euromonitor Estimates estimates that the overall U.S. apparel and footwear industry market size was $369.8 billion in 2019. While the industry temporarily contracted to $285.7 billion in 2020 due to COVID-1920, it is expected to grow to $395.2 billion by 2025, with a projected CAGR of 7% from 2020 onwards.
Traditional brick-and-mortar clothing brands and retail models are under increasing pressure. From 2016 to 2019, the U.S. apparel industry's online penetration rose from 17% to 25%, and the shift in this category is expected to continue, reaching 38% by the end of this year and 49% online penetration by 2025. Millennial and Gen Z consumers are increasingly enjoying shopping online, forcing many traditional retailers to close a large percentage of previously profitable brick-and-mortar stores over the past few years.
According to DataReport, the average consumer now spends 2 hours and 25 minutes a day on social media, which equates to about one day of waking up each week. According to research by brand research firms, this trend toward online media consumption and e-commerce is more pronounced among the youngest generation, with 58 percent of Gen Z consumers saying they are online almost all the time. This large group represents the first generation to communicate, learn and shop online and on mobile devices.
Team of underwriters
Goldman Sachs, BofA Securities, Jefferies, Baird, Cowen, KeyBanc Capital Markets, and Piper Sandler are the joint bookrunners of the transaction.
Beast Finance is committed to enabling every unwilling young person to learn to invest in U.S. stocks and experience the fun and excitement of being the shareholder of the world's number one company in the most mature and compliant market in the world. Let every young person have dignity and equality to gain freedom through U.S. stock investment. Like a beast, we pay attention to the global US stock market, Hong Kong stocks and other stock markets, and provide professional financial information, financial circle social networking, brand marketing, financial public relations, online and offline activities, overseas marketing and other services for investors, listed companies and financial institutions. Beast Finance also operates a location-based stranger financial social platform: the Money World Community.