As one of the executives with the highest salary increase and absolute value last year, Calvin McDonald is leading lululemon into an important expansion phase, and executive compensation is one of the barometers of the company's performance.
According to fashion business dispatch, Canadian sportswear brand lululemon's latest filing with the U.S. Securities and Exchange Commission shows that brand CEO Calvin McDonald's salary rose 25.3% to $13.3 million last year, of which the value of stocks and options was $8 million, except He also received $1.3 million in compensation and $4 million in incentive compensation.
Typically, the bulk of executive compensation comes from the grant of stock and options, the value of which fluctuates with the performance of the market and the company. Although lululemon's stock price fell slightly in the 2021 fiscal year ended January 30, since the 2020 epidemic, lululemon's stock price has risen by 55%. Last year, lululemon's sales rose 42% year-on-year to US$6.3 billion, a 57% increase from 2019, and its net profit rose 65.5% to US$975 million.
For comparison, according to the latest data released by Nike Group, CEO John Donahoe’s total compensation for fiscal year 2021 (June 2020 to May 2021) is $32.9 million, less than $53.5 million in 2020, Chief Financial Officer Matt Friend's total compensation nearly quadrupled from the previous year to $12 million. For the full year of fiscal 2021, Nike Group's revenue rose 19% to US$44.538 billion, and its net profit rose 123% to US$5.7 billion. During the period, the group's stock price rose by 32%.
Another U.S. sports giant, Under Armour, filed a filing with the U.S. Securities and Exchange Commission showing that CEO Patrik Frisk will receive a total compensation of $15.5 million in 2021, more than double his $7.4 million in 2019. Annual compensation is $6 million. Patrik Frisk succeeds founder Kevin Plank as CEO in 2020.
In the 2021 fiscal year ended December 31 last year, Under Armour’s sales rose 27% year-on-year to $5.683 billion, and operating profit recorded $486 million, a significant improvement over the previous fiscal year’s operating loss of $613 million.
Among other top-paid executives in the apparel industry, Walmart CEO Doug McMillon's earnings in fiscal 2021 surged from $22.6 million to $25.7 million. Target Group CEO Brian Cornell made $19.7 million last year. Gap CEO Sonia Syngal's total compensation for fiscal 2021 was $18.3 million, down from $21.91 million in fiscal 2020. She was previously the CEO of Old Navy, a cash cow of Gap Group. Under her leadership, Gap Group is making strategic adjustments and may sell its China business. More executives' 2021 earnings are yet to be disclosed.
Outstanding performance has clearly become the endorsement of Calvin McDonald's salary increase. At the same time, however, lululemon has also raised the base salary of its North American employees and has continued to expand employee benefits.
According to employee benefit details released by lululemon, effective September 27, 2021, lululemon has increased the minimum base salary for employees in most of its stores and Customer Education Centers (GECs) in North America. As part of the additional investment, those currently employed and those hired from now on will receive a minimum wage of $15 or $17 an hour, depending on their respective roles and markets.
As one of the executives with the highest pay growth and absolute value last year, Calvin McDonald is leading lululemon into an important expansion phase.
Lululemon released a new five-year growth plan on April 20, targeting $12.5 billion in revenue in 2026, meaning doubling revenue from 2021. This is the second five-year long-term plan released after the group completed its 2019 five-year plan ahead of schedule. In April 2019, lululemon set a series of five-year financial goals called Power of Three, which are total revenue exceeding US$5 billion, doubling of e-commerce business and doubling of men's clothing business, all of which are currently completed two years ahead of schedule.
The latest growth strategy, called Power of Three ×2, includes doubling menswear and digital revenue from 2021 levels, quadrupling international revenue, and reaching low double-digit revenue in womenswear and North America over the next five years. The compound annual growth rate of the store, the compound annual growth rate of the store is in the double digits. Meghan Frank, lululemon's chief financial officer, called the goals "bold but realistic."
Calvin McDonald said lululemon is still early in its growth journey. The three key drivers behind achieving growth targets are product innovation, customer experience and market expansion. There is still a lot of room for growth in the future as the brand gradually extends its category into footwear and more functional apparel, as well as in markets such as Spain and Italy.
Citing data from the NPD Group, lululemon said that from 2019 to 2021, it gained more market share globally than any brand in the adult sportswear industry. Its rivals include giants such as Nike, adidas and Under Armour, as well as emerging brands such as Vuori, known as the men's version of lululemon, and women's Sweaty Betty.
Given that lululemon's international revenue grew by more than 50% last year, but still accounted for only 15% of the business, lululemon plans to add about 40 stores in key markets outside North America, with the goal of doubling its international business by the end of this year.
China will become the world's second largest market for lululemon. In the past year, lululemon's store opening pace in China has accelerated significantly. It has opened its first store in 6 cities including Nanning, Ningbo, Jinan, Hefei, Lanzhou and Sanya, opened its largest store in Beijing Blue Harbor, and completed the Shanghai Xintiandi store. , Beijing Sanlitun store, Shenzhen Wanxiang Tiandi store and Chengdu Sino-Ocean Taikoo Li store refurbishment and expansion, forming a pattern of "southeast, northwest" four stores.
Judging from the recent intensive latest moves, lululemon has begun to move towards the latest goal. lululemon will launch a membership program in the second half of this year to better maintain the emotional connection between the brand and consumers, enhance customer loyalty, and sell fitness equipment. The membership plan is divided into two forms: paid and free. Free members can get discounts in advance, while paid members pay $39 per month to enjoy additional benefits such as offline activities and online exercise courses.
lululemon is also constantly exploring new businesses. Its first sports shoe collection, which took two years to create exclusively for women, was officially released last month, and men's products will be launched next year. Calvin McDonald told analysts on an earnings call last month that the market feedback on the footwear launch has been incredible.
Lululemon's first tennis collection also hit shelves this month, covering men's and women's apparel and accessories, featuring high-stretch, "light feather" fabrics and wicking, quick-drying materials, with brand ambassador Canadian professional tennis player Leylah Fernandez on the court this season Wearing lululemon single product competition.
In addition, lululemon is also looking to partner with more athletes, which is also a way to gain brand awareness and credibility with the male consumer segment. In addition to being the official sponsor of Team Canada at the Winter Olympics, featuring former NBA player JR Smith as a brand ambassador, the brand recently signed a golfer and launched a golf collection that it hopes will reach 25% of male consumers Deep connection.
Some analysts pointed out that lululemon is using practical actions to prove that it is no longer just a yoga clothing brand, but a comprehensive sportswear group, which means that lululemon's high-speed growth period has just begun. Following the outbreak of the 2020 pandemic, consumers' desire to dress comfortably while spending more time at home has been a driving force for many sportswear brands. According to a GlobalData research report, the global sports and leisure market will grow by 25% to $551 billion in 2025, exceeding McKinsey's previous forecast of $400 billion.
Market research agency Piper Sandler's latest report on American teenagers this spring shows that lululemon has climbed rapidly, ranking third in the list of the most popular clothing brands, behind Nike and American Eagle. Among the brands that high-income teenagers have begun to wear, lululemon ranks fourth on the men's list and first on the women's list, both rising from the previous quarter.
Behind the increasing influence of lululemon among teenagers, on the one hand, the trend of tights has become the top fashion trend among high-income female teenagers with an overwhelming advantage, and on the other hand, the consumption power of women's clothing is soaring. Compared with middle-income teenagers, lululemon is more popular with high-income teenagers and is the second most popular clothing brand after Nike, which is also related to the higher price of lululemon compared to brands such as Nike.
It is worth noting that lululemon previously stated in the financial report meeting that due to the increase in global logistics and transportation costs, lululemon will adjust the price of some styles this year, and increase the price moderately within a reasonable range to ensure the profitability of the brand.