00:00So we just went through a bunch of numbers, how we're seeing how the China market obviously last year and into this year took the advantage of the big boom in athleisure wear and sporting wear and outdoor activities.
00:12We have seen that market tail off a bit. How are you being impacted by that?
00:18We have only been in Lululemon China for only 12 years. So we feel like this is only the beginning of our journey.
00:24And we have been not going in China, but going together with China in order to expand this healthy China 2030 movement that the government is pushing.
00:35So we do see our positioning as a well-being advocacy with our products, with our community to drive movement, to find joy in movement and not necessarily a certain sports and activities.
00:49But how are you seeing the drive to boost consumption? Is that starting to pay off?
00:55Obviously, people are a little bit hesitant to spend a lot right now.
00:59Households are holding on. But $150 leggings, yoga pants, $600 jackets.
01:06Are you finding a sweet spot that still commands? Because there's also the lower cost or lower price dupes, the alternatives.
01:14So I feel like Chinese guests are very sophisticated. Our product, we believe in the science of you.
01:20We have a lot of technology and innovation in our material that once you put on our product, you know the sensation is different.
01:27The durability and versatility of Lululemon product makes it a good investment.
01:32A lot of Chinese guests that want to buy. Obviously, there's competition, there's option, but it actually gives us a sweet spot where I think it's value for money that the Chinese guests love.
01:41What kind of pricing power do you have right now? Because China, you've been kind of a margin king compared to in the United States.
01:49So actually, you've had better pricing power here than in your biggest market in the United States.
01:55So definitely, I think in terms of pricing, it's an acceptable level. I think the guests enjoys it.
02:00On top of it, it's the community that we bring together, the awareness of well-being that we're trying to advocate.
02:07It's something that resonates really, really strongly with our Chinese guests.
02:09What would you like to see from authorities as far as kind of unlocking the consumer?
02:16Li Qiang was here at the CIIE, the premier, yesterday, and he was saying, we need to unlock the consumer.
02:22Consumption, given the trade war, consumption is going to be key and boosting that contribution to GDP.
02:29Definitely. I think we see ourselves as a player, together with the Chinese government, about bringing well-being and wellness to China.
02:37So as the government support us in building more stadium, promoting activity, we also play a part in bringing community together, making them accessible to workouts, to yoga classes.
02:50They're free. All our stores, our 165 stores across the country, are actually our community hub that provide access to classes for free.
02:59So 165 stores now?
03:02In 45 cities.
03:03So what is the projection over the next couple of years?
03:05Do you see room to grow even further? And where and how many stores are we talking?
03:10Yeah, we still see runway and opportunity, not only in our 165 stores.
03:14We also have a strong online business that enables us to actually know where our guests actually live.
03:20But in that sense, we still see a runway of growth in Tier 2, Tier 3 cities.
03:26Okay. Singles Day is coming up. You usually get a boost, right, on November 11th?
03:32Yeah, it's started.
03:33It's already started, the pre-Singles Day, right?
03:35So are you going to be able to keep that kind of momentum through the rest of this year and into 2026, given the overall slowdown in this segment?
03:44Definitely. I think Singles Day's performance so far has been very, very strong.
03:49What's very, very strong?
03:50We definitely see very good growth. But I know Singles Day had another few more weeks to go.
03:55But so far, the result has been very, very encouraging.
03:57At the same time, it's like how do you differentiate in terms of platform?
04:01How do you actually balance your own services and how to store and online not cannibalize one another?
04:08It's things that we're working on through services, through product differentiation.
04:11So it's been very, very positive for us.
04:14Now, some of those numbers that Yvonne and David brought up, we're looking at those charts.
04:18Last year, we were seeing China contributed about 10% of global revenue.
04:23Projections, 2027, about 16.8. Is that in line with your internal numbers?
04:2917% of global markets.
04:30So how important then, when you go back to the North American market and see weakness in the United States,
04:36or at least slowing pace of growth,
04:38how important then would China be to the overall global ambitions of this company?
04:42China is Lululemon's second largest market.
04:46So our growth and our focus on the growth of how we build the internal collective as well as local talent
04:51enable us to actually understand this market, feed back to global, and grow in China.
04:57What has the overall trade chaos in the world done to your strategy and how you're thinking about growing this market
05:04and the bifurcation of supply chains as well as shopping trends?
05:08So I'm only responsible for China in that sense.
05:12I don't see immediate chaos for both of us.
05:14How has it affected your procurement?
05:16I think China is one of the biggest sources of fabrics for you.
05:20How has that changed and has it changed now that we've had a bit of a truce
05:24and a relaxation in some sectors for tariffs?
05:27So as today, I don't see any impact to the China business per se.
05:32No impact at all?
05:33Not with China.
05:35My business in China.
05:36On procurement?
05:37Procurement is here.
05:38Do you see yourself maybe buying more from China?
05:41We have a shared resources in terms of procurement and allocation.
05:47As of today, I think we are strong in where we are today.
05:50Yeah.
05:51Okay.
05:52Going forward, though, where would you take this model next?
05:57The China market has been very successful.
05:59I know you only look at this market, but is this a market that you can replicate elsewhere in Asia?
06:07As a model that you can take back to Vancouver and say, this is working.
06:10We definitely share a lot of all our successes with the rest of the region
06:14to see that it's actually resonate with them.
06:17In a sense, like in terms of our store design, how we actually do an event,
06:21like our Chinese New Year campaign.
06:22So I don't see it as China for China only.
06:25But at the same time, I always look at it as not a China strategy.
06:29It's a Chinese strategy.
06:30At the end of the day, there are Chinese around the world.
06:33And how do we share this?
06:34And how do we syndicate what we have done well to the rest of the world?
06:37So earlier, we talked about that boom time through last year in athleisure
06:42and experience spending, right?
06:44So how do you see the segments changing?
06:47What are Chinese buying now?
06:48How has that changed?
06:50What are your product mix?
06:51So definitely there's a lot of competition at play,
06:54but I feel like competition doesn't have to be a threat.
06:56It's actually a catalyst for innovation and excellence.
07:00I think for our product, we call it high-performance, high-style.
07:03It's technical material, but it's versatility that enables you to wear to the office,
07:08to wear for casual, to wear for a sweat.
07:10So in that sense, I think our success in material innovation
07:15has actually helped us to scale into other occasions that the guests could wear.
07:19What does 2026 look like then for you as compared to this year?
07:23We're still getting 2026.
07:24But as it is, we're still very positive of our outlook for China.
07:28Yeah.
07:28And the dupes.
07:30I have to talk about them because they've hit all the other major competitors of you as well.
07:36Getting lower-priced alternatives to the premium brands such as yourself.
07:41How does your strategy change to counter that when a lot of those dupes are showing up online
07:47at Singles Day and beyond?
07:50There's definitely dupes for everywhere and anywhere.
07:53But if you were to try a Lululemon legging, you would know the difference.
07:57You know, our material technology is based on science of view.
08:01They may look the same, but when you put it on,
08:03you absolutely could tell the difference between a dupe and a Lululemon legging.
08:07So in that sense, I think at the end of the day, the guests will realize that
08:11it's actually what they pay for in terms of quality and performance.
Be the first to comment