Categories IPO, Retail

IPO news: Lulu’s Fashion Lounge goes public this week; here are a few points to note

The company will offer 5.8 million shares at a price range of between $16 and $19

The fashion and apparel market is a massive one that constantly sees shifts due to changing preferences of customers. It took a hit during the pandemic but has recovered meaningfully since then. During this period, there has been an increase in online shopping which led many retailers to expand their omni-channel capabilities. This week will see the market debut of digitally-native fashion brand Lulu’s Fashion Lounge. Here are a few points to note:

IPO details

Lulu’s Fashion Lounge Holdings Inc. is scheduled to go public on Thursday, November 11. It will begin trading on NASDAQ under the ticker symbol LVLU. The company will offer 5.8 million shares at a price range of between $16 and $19. The IPO will be managed by a group of underwriters led by Goldman Sachs.

Company intro

Lulu’s is a digitally-native fashion brand that mainly serves millennial and Gen Z women. The company follows a strategy that is different from traditional retailers under which it tests new products in small batches, evaluates customer demand and then reorders winning products in higher volume to improve profitability. This allows it to rapidly convert new products into profitable sales while lowering fashion and trend risk.

During the six months ended July 4, 2021, 70% of Lulu’s sales were from reorders and 94% of its reorder products were sold without moving to sale pricing. During the 12 months ended October 3, 2021, the company served 2.5 million active customers.

Financials

For the fiscal year ended January 3, 2021, net revenue amounted to $248.6 million compared to $369.6 million in the previous year. Net loss amounted to $19.8 million, or $1.13 per share, compared to $469 million, or $0.03 per share, last year.

For the six months ended July 4, 2021, the company generated net revenue of $172.5 million compared to $139.5 million during the same period last year. The company reported a net income of $4.2 million, or $0.24 per share, for the period versus a loss of $16 million, or $0.92 per share, in the same period a year ago.

For the three months ended October 3, 2021, the company expects revenue to range between $104.5 million and $106.3 million and net income to range between $3.3 million and $3.9 million.

Market opportunity

According to Euromonitor, the aggregate apparel and footwear market in the US stood at $369.8 billion in 2019. In 2020, it contracted to $285.7 billion due to the COVID-19 pandemic. It is expected to grow to $395.2 billion by 2025, representing an expected CAGR of 7% from 2020.

From 2016 to 2019, online penetration in the US apparel industry increased from 17% to 25%. It is expected to reach 38% by the end of this year and 49% by 2025.

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