Happy Friday!
This is the Insights monthly update. This month, we provide the top 10 deals from the past month, key industry earnings releases from March, and One Big Thing about Lululemon and the athleisure market. As always, if you have any questions, comments, or suggestions, please reach out to me directly at [email protected].
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Reports This Month
One Big Thing
This past week, Lululemon posted its fiscal 2021 earnings, and the athleisure giant did not disappoint. The company surpassed $6 billion in annual revenue for the first time in its history on the heels of weak economic data. The athletic apparel retailer generated $2.1 billion in revenue in Q4 2021, a 23% increase compared to the same period the year prior, behind growth across all business segments.
- Full-year revenue reached $6.3 billion, a 42% increase year-over-year.
- Company-operated store revenue increased 70% compared to FY2020.
- Revenue grew by 40% in North America and increased 53% internationally.
- It repurchased 2.2 million shares at an average price of $369.16 per share.
One of the retailer’s more notable investments was in brick-and-mortar stores. Lululemon opened 22 new, company-operated brick-and-mortar locations during the quarter, bringing its total to 574 stores worldwide. Most importantly, these company-operated stores continue to grow in revenue in a post pandemic world.
Footwear could also be a potential revenue driver in the future. Earlier this month, Lululemon stepped into footwear with the launch of The Blissfeel, the company’s first women’s running shoe, which retails for $148. Lululemon plans to release three additional lines of women’s footwear and will unveil men’s footwear in 2023.
The functional sneaker market has boomed since the onset of the pandemic, as more consumers have opted either for exercise or for more comfortable shoes while working from home.
The footwear category has shown some serious traction in the past 24 months. Competitors ranging from giants Nike and On Running to niche brands Allbirds, which also makes a running shoe, have all made significant moves to build brands and fortify distribution strategies.
Lululemon has been looking to get into the footwear game for a while now. Back in 2019, before the pandemic, CEO Calvin McDonald said the company saw a whitespace in the shoe market. He hinted that at some point Lululemon would begin selling its own footwear, building on the success it had with APL.
Athletic footwear sales in the United States grew 17% for men and 24% for women in 2021 compared with 2020 levels, according to data from market research firm NPD Group.
Athleisure Market Tailwinds
Over the last two decades, Lululemon has built a reputation as a best-in-class fitness-apparel retailer, outperforming the S&P Retail Index by 260% over the last five years.
The company has achieved its success primarily through brand awareness. While this would typically show up as an intangible asset on a balance sheet, Lulu’s brand has become ubiquitous with the market.
A term that describes this attribute is “mindshare.” Having mindshare causes people to associate a company’s reputable image with the best of a certain product. The Lululemon brand is now synonymous with premier fitness apparel and athleisure.
As it turns out, it’s good to be associated with the athleisure market. The remote working economy will help spur the continued adoption of athleisure apparel.
According to a recent Gallup poll, “45% of full-time US employees worked from home either all (25%) or part of the time (20%) in September” 2021. This is true across the globe as well, with Gartner estimating that 31% of worldwide workers will be remote in 2022.
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Here are 10 of the most notable deals from the month of March.
- Fanatics, an operator of a multichannel sports merchandise retailer and digital sports platform, raised $1.5 billion in development capital from Blackstone, MSD Capital, and Fidelity Management & Research.
- Serena Ventures, a venture capital firm based in San Francisco led by Serena Williams, closed its inaugural $111 million seed and early-stage fund.
- iFIT Health & Fitness, a health and fitness subscription technology company, raised $355 million in capital from L Catterton.
- Griffin Gaming Partners, a venture fund focused on investing in gaming platforms and infrastructure, raised a $750 venture fund. The firm now has more than $1 billion in assets under management.
- Mojo, the developer of a “stock market’’ for professional athletes that allows fans to buy and sell players whose values rise and fall based on performance, raised $75 million in funding from a group including Thrive Capital, Alex Rodriguez, and Marc Lore.
- Hydrow, the provider of body fitness equipment offering in-home rowing workouts for a whole-body approach to health, raised $55 million from a Series D funding round from Constitution Capital, L Catterton, RX3, Liberty Street, Activant Capital, and Sandbridge Capital.
- FRVR, the developer of online games designed to connect billions of players to captivating games instantly and allow fans to buy and sell players whose values rise and fall based on performance, raised $76 million in venture funding from Hiro Capital.
- C2X Gaming, the Terra-based blockchain gaming company developed by South Korean game publisher Com2uS, raised an undisclosed amount through a token sale at a $500 million valuation. The round was led by FTX and Animoca Brands.
- Yuga Labs, the developer of famed NFT project Bored Ape Yacht Club and owner of Crypto Punks, raised $450 million in venture funding at a $4 billion valuation in a round led by Andreesen Horowitz. The company plans to use the funds to “build a media empire around NFTs.”
- Nielsen, the video and TV ratings data-aggregation giant, was sold to a consortium of private equity buyers led by Evergreen Coast Capital Corp and Brookfield Business Partners in an all-cash deal that values the company at $16 billion.
View out the full Deal Tracker.
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Selected earnings calls and results from the past month:
Nike: Nike notched $10.9 billion in revenue, up 5% year-over-year for the quarter.
Anta Sports: Anta Sports posted growth across all its business operations in 2021 with revenue reaching $7.7 billion.
Lululemon: The athletic apparel retailer surpassed $6 billion in annual revenue for the first time in FY2021.
L.L. Bean: L.L. Bean reported a 14% increase in annual revenue to $1.8 billion with athleisure and activewear apparel leading the way.
Sportradar: Sportradar reports $634 million fiscal year, a 39% increase year-over-year, driven by growth across all business segments.
Crazy Sports: Crazy Sports announces 2021 results with a net profit of HK$157 million.
Academy Sports: Academy Sports + Outdoors reported record sales of $6.77 billion in 2021 a 19.1% year-over-year increase and a 40.2% jump from 2019.
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Netflix is adding a Tour De France docuseries to its growing catalog of sports properties. The most recent move by the streaming giant further cements its position that sports drive considerable interest, but they are still unwilling to pay for rights to stream live games.
After its incredibly successful Formula 1 series “Drive to Survive,” Netflix has already commissioned golf and tennis shows which follow prominent players.
While it has clearly found its lane from a sports programming perspective, Netflix might ultimately be driven into the live sports rights space if it wants to keep up with the likes of Apple and Disney.
While Netflix prides itself on its content, Apple was able to earn the title of first tech company to earn a Best Picture award at the Oscars with “Coda.” Furthermore, Apple — with the addition of MLB games — and Disney both have live sports streaming rights deals in place.
In one of our previous reports, we outlined the importance that sports fans play for streamers. In essence, live sports tend to seal the deal for streaming consumers — frequent sports are 74% more likely to subscribe to a given service offering live sports.
With Apple now locked in with MLB and Disney owning rights to various sports properties — including their existing bid with the Indian Premier Cricket League for a reported $7 billion — Netflix might soon find itself behind the eight ball, regardless of the success of “Drive to Survive” and its clones.
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