1) Underperforming stores (lululemon was a publicly traded
$350 million company with close to 100 stores, including 56 in the United States, and nearly 3000 employees.);
2) Mismanagement of the real estate strategy had resulted in high-cost locations in many of the new U.S.
markets with little to no demand (connect the company’s real estate strategy to its brand, building market
demand by focusing on that which influences its core customers - possibly this strategy was not adhered anymore). Perhaps the biggest legacy of the rapid expansion into the U.S was misguided real estate decisions
that continued to drain resources more than two years later.;
3) Poorly supervised construction at many sites caused
escalating costs and quality concerns;
4) Cross-functional barriers had eroded the sense of
teamwork within the organization, resulting in an inability to achieve compromise (people weren’t aligned);
5) As lululemon scaled up, persistent problems with inventory suggested that the company’s growth
was outpacing the development of infrastructure and operational systems. Stores in coastal areas often run short small sizes and those in the Midwest sell out of larger sizes. Inventory problems have crimped margins, since the company had to pay extra to ship out-of-stock items to stores by air.
SUMMARY: Lululemon was plagued by persistent inventory problems and
real estate issues in the United States. Moreover, the company’s leadership team was demoralized
and fragmented