According to Tianyancha data, Lululemon's main company in the mainland, LuluLemon Trading (Shanghai) Co., Ltd. (hereinafter referred to as Lulu Lemeng Trading), was fined 81,000 yuan for shoddy charging on March 18.
On the afternoon of May 5, Lululemon posted on Weibo that he was deeply sorry for the fact that the filling of The Navigation men's down vest did not meet the national standards. The company removed the relevant batch of products at the first time, carried out detailed internal verification, and actively carried out rectification.
Production depends on suppliers, 7% of products made in China
According to the penalty details, after investigation, from October 1, 2021, Lulu Lemeng Trading will use some products (a total of 59 pieces) for sale in its 9 stores in Beijing, with a list price of 1380 yuan per piece. As of November 3, 2021, a total of 51 pieces were sold, with sales totaling 67205.34 yuan (some products were sold at discounted prices). The products that have been sold, Lulu Lemeng Trade, have not been recovered. Lulu Lemeng trade profit of 23431.05 yuan. The total value of the goods is 81420 yuan.
According to the penalty details, the types of illegal acts of Lulu Lemeng trade are Article 39 of the Product Quality Law of the People's Republic of China and Article 50 of the Product Quality Law of the People's Republic of China. Among them, Article 39 reads: "Sellers who sell products shall not be adulterated or adulterated, and shall not be falsely or shoddy, and shall not pass off unqualified products as qualified products"; Article 50 is "If a seller sells a product that is false or adulterated, falsely filled with a genuine product, or a subsumed product is passed off as a qualified product, he shall be ordered to stop production and sales, confiscate the illegally produced or sold product, and impose a fine of not less than 50 percent but not more than three times the value of the illegally produced or sold product; if there are illegal gains, he shall also be sentenced to confiscate the illegal gains." If the circumstances are serious, the business license shall be revoked; if a crime is constituted, criminal responsibility shall be pursued in accordance with law."
On the afternoon of May 5, Lululemon said on Weibo that he was deeply sorry for the fact that the filling of the Navigation men's down vest did not meet the national standards. The company removed the relevant batch of products at the first time, carried out detailed internal verification, and actively carried out rectification. Nandu reporters have not been able to search for Navigation men's down vest products on major e-commerce platforms.
Although Lululemon did not disclose the reason for not reaching the pile, from Lululemon's financial report, Lululemon's production link is highly dependent on suppliers. Lululemon's earnings report revealed that Lululemon does not produce products or raw materials, but relies on suppliers. Although Lululemon has established long-term cooperative relationships with suppliers and manufacturers, they have not signed long-term contracts with each other, which means that the fabric does not constitute a barrier to competition between Lululemon and other clothing brands.
In 2021, about 40% of lululemon's products are manufactured in Vietnam, 17% in Cambodia, 11% in Sri Lanka, and 7% in China (of which 2% are made in Taiwan).
China is the second largest market in the world after the United States in terms of number of stores
At the same time as the fine, lululemon is also experiencing rapid growth at home and abroad in recent years. According to the financial report, Lululemon's full-year revenue in 2021 was $6.257 billion, an increase of 42.1% year-on-year; net profit was 975 million yuan, an increase of 65.5% year-on-year.
According to the financial report, lululemon mainly sells in two ways, namely store and DTC (direct-to-consumer channel). In 2021, lululemon's revenue through store sales accounted for 45%, compared to 38% in 2020; lululemon's revenue through DTC accounted for 44% in 2021, compared with 52% in 2020.
Judging from the store data, China is already the largest market for Lululemon outside the United States. By the end of 2021, lululemon operates 574 stores in 17 countries around the world. Among them, the United States has the largest number of stores, reaching 324; followed by China, with 86 stores (including 16 in Hong Kong, Macao and Taiwan).
The total number of lululemon stores in the mainland has reached 71, mainly in Beijing, Shanghai, Shenzhen, Chengdu and other first-tier cities and new first-tier cities. According to lululemon's official website, its stores are mainly located in Joy City, MixC, Taikoo Li, Plaza 66 and so on.
Calvin McDonald, CEO of Lululemon, said: "2021 is another successful year for Lululemon. The performance in fiscal year 2021 underscores our brand dynamism and our ability to grow over the long term. We broke through the $6 billion revenue mark for the first time and completed our 'Power of Three' growth plan ahead of schedule. We are very proud of this, especially in the current challenging external environment. ”
It is understood that "Power of Three" is a five-year plan formulated by Lululemon in April 2019, hoping that by 2023, the sales revenue of its menswear and online businesses can double and achieve a three-fold increase in international sales revenue.
On April 20, Lululemon announced a new growth strategy, Power of Three ×2, which plans to double revenue to $12.5 billion in 2026 from 2021, when China will become Lululemon's second largest market in the world.
André Maestrini, executive vice president of lululemon's international business, shared plans for how to develop in China, including continuing to build the official flagship store of Tmall, opening a flagship store in JD.com, and increasing the construction of its own e-commerce channels for lululemon.cn and WeChat Mini Programs; the number of stores in Chinese mainland is expected to reach 220 by fiscal 2026; and the launch of Asian version products for Chinese guests, seasonal limited series products inspired by traditional Chinese culture.
In addition to yoga clothes, lululemon also entered the running shoe market in March this year, and China is also one of the first running shoe markets. From March 23, 2022, some offline stores and e-commerce channels in the Chinese mainland market will sell Ms. Blissfeel running shoes. Three other footwear products: Chargefeel women's sneakers, Strongfeel women's training shoes, and Restfeel slippers will also be available this year.
Written by: Wang Chenchen, reporter of Nandu Bay Finance Agency