Prue Valdez

Angela Pendoley

Jiayue Luo

Athleisure Organic Waterproof Beauty Line

Agenda

• Lululemon License with Tarte Cosmetics
• Lululemon History
• Lululemon’s DNA
• Lululemon Brand’s Positioning
• Athleisure Organic Waterproof Beauty Line Products
• Lululemon Strategic Plan
• Lululemon Distribution Channel
• Lululemon marketing techniques
• Three years sales projection
• Lululemon beauty product term sheet

Financial Picture of Overall Cosmetic Industry

Annual growth of the global cosmetics market from 2004 to 2017

“Annual Growth Rate of the Cosmetics Market Worldwide, 2017 | Statistic.” Statista, www.statista.com/statistics/297070/growth-rate-of-the-global-cosmetics-market/.

“L'Oréal 2017: Cosmetics Market.” L'Oréal - Rapport D'activité 2016, www.loreal-finance.com/en/annual-report-2017/cosmetics-market.

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The growth of gym culture

These days, an increasing number of individuals are going to gyms so as to counter the side-effects of their hectic urban lifestyles

Gym culture and gyms are increasingly becoming a necessity for people to lead a healthy life.

Athleisure isn’t necessarily about working out; it’s the overall concept of being active, comfortable, and put together.

Total number of memberships at fitness centers / health clubs in the U.S. from 2000 to 2016 (in millions)

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“Gym Memberships in the U.S. 2000-2016.” Statista, www.statista.com/statistics/236123/us-fitness-center--health-club-memberships/.

Jain, Vikas. “#8 Reasons Why Popularity of Gyms Is Increasing Exponentially.” Entrepreneur, Entrepreneur, 5 July 2017, www.entrepreneur.com/article/296797.

Why a License Athleisure organic waterproof beauty line? How ?

• Constantly increase in the cosmetic industry from 4% in 2016 to 5% in 2017
• Popularity to the gym is increasing exponentially
• Women are concern about their look
• Athleisure is adding a fashion trend, Athleisure Beauty

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• The Net Sales for Lululemon is 2.5B
• Introducing a license Athleisure organic waterproof beauty line with Tarte marketed “Athleisure isn’t necessarily about working out; it’s the overall concept of being active, comfortable, and put together” has a 125M dollar opportunity from 5% of its sales.

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“Lululemon Athletica, Inc. - Annual Report.” (NASDAQ:LULU), investor.lululemon.com/secfiling.cfm?filingID=1397187-18-13&CIK=1397187.

History of Lululemon

• Founded by Chip Wilson
• In Vancouver, Canada in 1998
• A design store during the day and Yoga studio by night
• Wilson saw the that there was an opportunity in the market for yoga pants.
• His pain point of not finding yoga pants that were breathable
• He created the fabric and patent it.
• The pant is reversible it has 5 year warranty. It is breathable and started to sell for $90-$110
• This changed how women 25-35 year old how started to dress, for example, women started wearing yoga pants instead of sweats.
• Their first design was for women and then by positive feedback, they expanded their design for men.
• At one point their product was selling at Equinox, but decided to remove their product to become exclusive and only to be sold at Lululemon.

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DNA of Lululemon

Athletic apparel for women, mens, girls and accessories

Core Competency:

Technical athletic yoga pants

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• 2009- Girls department called “ivivva”

Womens department

• Yoga
• Run
• Train
• Swim
• Accessories

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Mens Department

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• Yoga
• Run
• Train
• Swim
• Golf
• Accessories

Girls Department

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• Dance
• Gymnastics
• Train
• Swim
• Accessories

Accessories

• Scarves
• Socks
• Water Bottles
• Shoes
• Yoga Mats
• Bags
• Hair Accessories & Hats

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Target Market

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• Millenials are the largest demographics
• Strive to a healthier lifestyle
• Age 25-35
• Deal with stress, keep bodies and minds healthy

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Substantiation

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Sweat Cosmetics

• In 2015-Sweat Cosmetics partnership with Sephora
• Sephora started selling Sweat Cosmetics online
• “Collection of breathable SPF 30 mineral foundation brushes in various skin-tone colors. The products are 80 minute water resistant, with no fragrance, oils, or silicones.”

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In 2016, Sweat’s monthly revenue has grown 560%

Fitness has become fashionable

Wearing make-up may be a comfort zone.

“You know you look good and pulled together when you run out of the house. It's totally effortless and comfortable, but still cool."

“It's the look that you feel comfortable putting on so you feel 100 percent confident in all of these real-life moments."

Said Maureen Kelly, the brand's CEO and founder.

Lululemon Competitors

Brand Positioning for Lululemon

Price

Quality

$40-$90

$11-$40

$38-$148

$140

$58-$118

$45-$130

Strategic Plan: Positioning of the Licensed product

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Price

Exclusivity

$25-55

$15-65

$32-90

$30-68

$37-90

$54-120

Price based on https://www.sephora.com/

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Athleisure Beauty Line

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Gym Bag Grab Athleisure Essentials

Limited Edition for $29

• Tinted moisturizers with SPF
• illuminating moisturizer
• on-the-go mattifying
• Sweatproof mascara

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Licensee

Competitive advantage : Eco-Chick Beauty Line

Ingredients:

• Superfruits, plant extracts, vitamins, minerals
• Amazonian clay and maracuja-infused complexion products have won a broad following and industry awards.

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1999

• Tarte was founded in NYC
• By Maureen Kelly a PHD dropout
• First product

Cheek Stain

2005

Sold in QVC

2003

Sold at Sephora

2000

• Tarte product - cheek stain appeared on Self Magazine
• First order- Henri Bendel

2014

Acquired by Kose Japan

2010

Receives an investment from Encore Consumer Capital

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Licensee

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Licensee

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• Lululemon core is “yoga is at the core of everything we do,” & Tarte athleisure beauty line category is “yoga pants of skin care”

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Tarte aligns with Lululemon core values

• Tarte adds Athleisure in their beauty category
• Athleisure Beauty Line is launch on December 2016
• Maureen Kelly founder/Ceo of Tarte, said “sporty is the new sexy”
• Kelly saw an opportunity in the market for a beauty line in Athleisure as activewear continues to grow
• Kelly stated in an interview about her Athleisure beauty line and call it the “yoga pants of skin care”
• Women want to look good even when they are working out

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Color and Inspiration

• Natural colors were selected to help achieve an effortless look
• Appropriate for the gym or yoga studio
• Flattering on all skin tones and eye colors

Why Vegan and Cruelty Free

• Growing demand for vegan and cruelty free goods
• Give Lululemon cosmetics and skincare an advantage over competitors using animal testing and animal products
• Save company money by not animal testing
• Important to the Lululemon target customer: Female (79% of vegan population), 18-34 (42% of vegetarian population), health and environmentally conscious

Lululemon

Athleisure Organic Waterproof Beauty Line

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• Waterproof mascara
• Eyeshadow quad
• Deodorant
• Dry Shampoo
• Foundation
• Sunscreen
• Eyeliner
• Lip Tint
• Inclusive cosmetic and skincare kit

Skincare

Cosmetics

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Lululemon Athleisure Organic Waterproof Beauty Line

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• Waterproof mascara $32-$40
• Eyeshadow quad $45-$65
• Deodorant $25
• Dry Shampoo $28
• Sunscreen $65
• Eyeliner $25-$40
• Exclusive cosmetic and skincare kit :$70-$90

Price Point:

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Distribution

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Promotion Social Media

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Promotion

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• Lululemon uses social media
• Word of mouth
• Tart reached out to Fitfluencers to promote their Athleisure beauty line
• FitFluencers are influencers who workout

Substantiation

3 year sales projection

Sales 2.34B in 2017

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Year 1- 2% of total sales

Year 2- 3% of total sales

Year 3- 4% of total sales

Year 4- 5% of total sales

Year 5- 6% of total sales

Year 6- 7% of total sales

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Cosmetics are 5% of total sales

Term Sheet

Net sale of Lululemon: 2.5B

5% of total sale are for launching new beauty line 125M

Year 1----2% of total sales

Year 2----3% of total sales

Year 3----4% of total sales

Year 1 Option Period----5% of total sales

Year 2----6% of total sales

Year 3----7% of total sales

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“Lululemon Athletica, Inc. - Annual Report.” (NASDAQ:LULU), investor.lululemon.com/secfiling.cfm?filingID=1397187-18-13&CIK=1397187.

Works Cited

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“Annual Growth Rate of the Cosmetics Market Worldwide, 2017 | Statistic.” Statista, www.statista.com/statistics/297070/growth-rate-of-the-global-cosmetics-market/.

“Gym Memberships in the U.S. 2000-2016.” Statista, www.statista.com/statistics/236123/us-fitness-center--health-club-memberships/.

Hoover. “Financial Statements Tarte Inc.” Hoover, www.hoovers.com/company-information/cs/company-profile.tarte_inc.ea3f0c06077c183c.html#financials-anchor.

Jain, Vikas. “#8 Reasons Why Popularity of Gyms Is Increasing Exponentially.” Entrepreneur, Entrepreneur, 5 July 2017, www.entrepreneur.com/article/296797.

“L'Oréal 2017: Cosmetics Market.” L'Oréal - Rapport D'activité 2016, www.loreal-finance.com/en/annual-report-2017/cosmetics-market.

“Lululemon Athletica, Inc. - Annual Report.” (NASDAQ:LULU), investor.lululemon.com/secfiling.cfm?filingID=1397187-18-13&CIK=1397187.

“Lululemon Athletica Inc.” MarketWatch, MarketWatch, www.marketwatch.com/investing/stock/lulu/financials.

“Lululemon Athletica (LULU) Net Profit And Net Margin From 2012 To 2016.” Revenues & Profits, 31 Dec. 2017, revenuesandprofits.com/lululemon-athletica-net-profit-and-net-margin-from-2012-to-2016/.

Orofino, Emily. “Are You a Beauty and Fitness Junkie? You'll Be Obsessed With Tarte's Athleisure Line.” POPSUGAR Tech, 4 Dec. 2016, www.popsugar.com/beauty/Tarte-Athleisure-Collection-What-Athleisure-Makeup-42789332.

Raphael, Rina. “Athleisure Makeup Has The Cosmetics Industry Breaking A Sweat.” Fast Company, Fast Company, 15 Oct. 2017, www.fastcompany.com/3067727/athleisure-makeup-has-the-cosmetics-industry-breaking-a-sweat.

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