Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Jason
Speaker 1: Kelly and I'm Carol Masser. Welcome to the Bloomberg Business
Speaker 1: Week Extra. It's our weekly podcast bringing you an in
Speaker 1: depth interview you will not hear anywhere else. And Jason,
Speaker 1: this week it's timely it's all about Lulu Levin. Well,
Speaker 1: that's right. This is tied to a story I actually
Speaker 1: have in Business Week magazine, the print edition and online
Speaker 1: of course. But underneath all of that is a long
Speaker 1: conversation that I had that really no one's had before,
Speaker 1: at least in public, with David Mustafer. He is the
Speaker 1: lead director over at Lulu Lemon, and Calvin McDonald the
Speaker 1: relatively new CEO. He's only been in the Seed about
Speaker 1: a year and a half or so. This is a
Speaker 1: company that has gone through a massive transformation, all while
Speaker 1: becoming one of the most influential retailers of our time. How,
Speaker 1: for lack of better term, sort of broken was it
Speaker 1: when you sort of got back in? I mean, I
Speaker 1: think the business was had its challenge is but at
Speaker 1: the core the issue was alignment. And so part of
Speaker 1: the power that that private equity can bring is that
Speaker 1: alignment and so in this case, we had a situation
Speaker 1: where the founder wasn't aligned with the board and the
Speaker 1: management team, and so you've seen some turnover of the
Speaker 1: senior management. You also didn't have the company uh in
Speaker 1: sync with the ability to make investments. They were following
Speaker 1: Wall Street and thinking about what they needed to do
Speaker 1: that quarter. And so I feel like what we saw
Speaker 1: as this fundamental opportunity was to help regain that alignment
Speaker 1: and put the platform in place so that the company
Speaker 1: could establish a really strategic proposition, not just here and now,
Speaker 1: but part of the real opportunity is to help them
Speaker 1: get out of the penny a share game, uh, you know,
Speaker 1: and make some of these investments that had deferred. Right.
Speaker 1: I want to get to the moment where Calvin you
Speaker 1: come into the company, but sort of leading up to that,
Speaker 1: you do have a series of of C e O
Speaker 1: s um so leadership becomes something at the at the
Speaker 1: top level that you also have to deal with in
Speaker 1: terms of the the various issues you have to address. Well, firstly,
Speaker 1: we had a situation where the board really was interested,
Speaker 1: loves this company and wanted to see its succeed and
Speaker 1: so in that regard, when we came back, we were
Speaker 1: able to create some of that alignment pretty easily and
Speaker 1: help create the um, the ability to put some of
Speaker 1: these ideas in place, the idea of a longer term plan.
Speaker 1: But you're right, I think some of those challenges with
Speaker 1: the founder made it hard and so UM at the
Speaker 1: point that that the founder exited the company in two
Speaker 1: thousand fifteen, we were really able to begin assembling a
Speaker 1: world class management team and so UH with a CFO
Speaker 1: who is initially with Stewart now CEO, and then talent
Speaker 1: along the way, leading to people like Glenn and Calvin
Speaker 1: and Son and a host of really world class business leaders.
Speaker 1: And the exciting part is that this business had that potential,
Speaker 1: it just needed the opportunity and the the framework. From
Speaker 1: this point and beyond, it really feels like the business
Speaker 1: is just getting started. And so at that moment where
Speaker 1: you where you do start to dig in, Calvin, I mean,
Speaker 1: what's what's the opportunity do you see to sort of
Speaker 1: take it to the next level. So for me, the
Speaker 1: first assessment was as an opportunity here to be even
Speaker 1: more than what Lululemon is, not just with the North
Speaker 1: America but internationally. UH, and I think the clear resounding answers. Absolutely.
Speaker 1: I mean, the vision we have today is to knite
Speaker 1: a community of people to live the sweat life UH.
Speaker 1: And we're going to express that not just through incredible
Speaker 1: product that will keep developing because there's so much opportunity
Speaker 1: and white space for us to develop into, but also
Speaker 1: through our strategy of events on what we do with
Speaker 1: our grow initiatives and seeing what Calvin and the team
Speaker 1: have already done with the manifestation of this some of
Speaker 1: this next step vision in Chicago and with the membership
Speaker 1: and loyalty program, you already are beginning to see some
Speaker 1: of the seeds of thinking about what the broader vision
Speaker 1: might look like. And so what does that look like
Speaker 1: going forward? Because it does feel like we're at a
Speaker 1: very interesting moment in the world of retail. We have
Speaker 1: a huge runway of growth. UM. Not only is our
Speaker 1: women's business continuing to grow at double digit, with a
Speaker 1: lot of growth opportunity being entering into new categories or
Speaker 1: we mentioned to and from OTC that doesn't even really
Speaker 1: in our women's UH category exist UH and into our
Speaker 1: omniguest experience with our digital platform, and as good as
Speaker 1: we are, there's a ton of opportunity to even more.
Speaker 1: This is an emotional brand, and our online continues to
Speaker 1: be more transactional, and then finally, you know, expanding into markets.
Speaker 1: We still have a lot of opportunity in North America,
Speaker 1: not to mention what's happening internationally and in Europe as
Speaker 1: well as in China. We feel we're early innings and
Speaker 1: everything we're trying to create through you know, we're going
Speaker 1: to double our men's business, proven that this brand resonates
Speaker 1: as much with women as men, which is super exciting
Speaker 1: for our category. It's a dual gender category. Absolutely, there's
Speaker 1: no reason why we would be able to do that.
Speaker 1: What's the private equity lesson here, David? I mean, what
Speaker 1: do you take away as you talk to your investors,
Speaker 1: as you talk to your partners? I mean, this will
Speaker 1: stand out clearly as a a lesson to some extent
Speaker 1: in doubling down in a lot of ways going back
Speaker 1: in UH, is it replicable? Like, what's the what do
Speaker 1: you take from this that you apply to future investments.
Speaker 1: We don't have the expectation that all of a sudden
Speaker 1: magic happens just because we've been a successful with a
Speaker 1: particular investment. But the thing that I think we began
Speaker 1: to get excited about is the power of the alignment
Speaker 1: that we could bring. In this case, we only owned
Speaker 1: of the company, and yet we were able to work
Speaker 1: with the management team and the board and then ultimately
Speaker 1: the shareholders to create a really powerful runway for this company.
Speaker 1: And I think the idea of of thinking about how
Speaker 1: we might be able to do that more broadly is
Speaker 1: something that we've begun thinking. UH those propositions through our
Speaker 1: phone is ringing, and so in this regard, I think
Speaker 1: the idea that there shouldn't be any arbitrary boundaries between
Speaker 1: a private company and a public company. The idea of
Speaker 1: applying this longer term UH strategy and approach is what
Speaker 1: a lot of these public companies need. Not every situation
Speaker 1: will will be applicable, but that's at least part of
Speaker 1: the thing that we've kept an open mind around well.
Speaker 1: And I do wonder about that in the same way
Speaker 1: that it feels like we're at an inflection point of
Speaker 1: sorts around experiences and lifestyles and things like that, where
Speaker 1: it's something at an inflection point for private equity where
Speaker 1: people are asking a lot of big questions around you know,
Speaker 1: adding value, you know, looking beyond the bottom line. We're
Speaker 1: hearing that from the Business Roundtable and others. What does
Speaker 1: private equity look like going forward with this? You know,
Speaker 1: you've got a couple of fresh pools of capital to
Speaker 1: deploy at this point. What are people looking for from you?
Speaker 1: I mean, I think that people are rightly concerned that
Speaker 1: we're at the peak of the economic cycle, and what
Speaker 1: does that mean as you're leaning into a private equity
Speaker 1: industry that's grown really rapidly over the last ten years.
Speaker 1: And so one of the things that I think has
Speaker 1: given uh ME some comfort is seeing that the industry
Speaker 1: learned a lot from the last downturn. And so while
Speaker 1: you're always going to have pressure, I think there's been
Speaker 1: a tremendous strides that our industry has taken to really
Speaker 1: lean into really savvy operational strategies for their companies and
Speaker 1: so really thinking like an industrialist as opposed to a financier.
Speaker 1: And that vision is part of where private equity can
Speaker 1: help think about best practices. We get the benefit with
Speaker 1: seventy five portfolio companies that we have around the world.
Speaker 1: We're eager to bring any of these best ideas to
Speaker 1: our companies as soon as we can. That was David
Speaker 1: Mussifer Lulu Lama lead director and Calvin McDonald Lulu Lemon ceo.
Speaker 1: It was a really fun conversation. We met at one
Speaker 1: of their stores here in New York City before regular
Speaker 1: business hours, so you sort of get to get a
Speaker 1: sense of all the merchandise. Clearly a bigger focus on men,
Speaker 1: a bigger focus on growth. This is a company that
Speaker 1: in many ways has defined the way we dress, do
Speaker 1: any shopping. I didn't, not this time around. Not this
Speaker 1: time around. You've been listening to the Bloomberg Business Week Extra,
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Speaker 1: Monday through Friday to be in Wall Street time on
Speaker 1: Bloomberg Radio. I'm Carol Masser and I'm Jason Kelly. This
Speaker 1: is Bloomberg