Up in Ontario

Lululemon Stretches for $108 million

In the pages of the business section today I found an article reporting that Lululemon, the trendiest of the trendy yoga-bunny wear makers / lifestyle enhancers, has sold 48 percent of itself to two U.S. private equity investment firms out of Boston for, exhale slowly, $108 million. The deal values Lululemon at $225 million. Who knew?

I remember when Lululemon first started just up the street from our apartment. They operated on the top floor of a retail space at Arbutus and W. 4th, where every operation for the company happened in the same space. On sunny days they opened a big garage door out the back and wheeled display racks onto a small parking platform to sell their gear. Now they have 33 retail stores in Canada, the U.S., Australia and Japan.

I report all of the above with some trepidation. I'm not really a fan of Lululemon clothes for me. I mean sure they're great on other bums, but I always find the men's gear is an afterthought, it doesn't fit me well and it's overpriced. Personal taste aside, I do admire their product marketing and promotional skills. They've done an incredible job of positioning Lululemon as a very specific brand, with a distinct character and selling proposition. It always seemed like such a great idea to see that in their retail store on W. 4th they did active product development. They had a whole section with a table and racks and gear dedicated to discussing their products with their customers. They participated in the community they wanted to reach. They tapped the yoga bandwagon zeitgeist at the perfect time and have ridden along since. Good for them.

But: here's the rub. In the article on the Globe and Mail they mention that Lululemon "aims to become a global brand as familiar as Nike or Reebok." Today most of their production is done in Canada, yet, "a small percentage is manufactured offshore, as it has become infeasible for us to produce everything in Canada. We are committed to maintaining the same high working standards at our off shore factories as at our Canadian ones." This is a great sentiment, but will it fly? At the boardroom table when someone asks a question about maximizing shareholder value but cutting costs, what will be the response? I guess only time will tell.

The last Vancouver company acquired and positioned for international sales was Arc'teryx who were bought by SolomonAdidas two years ago. I watched the acquisition like a hawk because I really love their gear - I challenge you to find pieces that do what they're supposed to do better than Arc'teryx pieces - and they operated the whole business here in Vancouver: design, head office, manufacturing, distribution. Since the acquisition it seems to me, through nothing more than casual label sniffing, that their manufacturing has migrated moreso offshore, but they still make a lot of their gear here in Vancouver, and they've kept the head offiice and design here as well. I guess we'll just have to wait and see how long that lasts.

So here's to hoping that the price of success for these two Vancouver clothing companies isn't the loss of what made them great in the first place, their souls. In as much as a company can have a soul, of course.