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Advent International leads US$93 Million investment in lululemon athletica

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8 December 2005, Boston - Advent International announced it has acquired a significant minority interest in Vancouver-based lululemon athletica, the premier athletics and yoga apparel specialty retailer.

The transaction will support the company’s growth strategy in the US and internationally and provide partial liquidity to the founder, Chip Wilson, who will retain a majority position in lululemon. The enterprise value of the transaction is approximately US$195 million. Advent partnered with Highland Capital Partners in this growth equity financing.

lululemon was founded in 1998 in response to the increased participation of women in athletics. The technical products are designed with the feedback of athletes and yoga participants, allowing lululemon to continually innovate the functionality and fit of their apparel. The company offers a comprehensive line of athletic pants, tops and yoga accessories. Today, lululemon is a premium brand and enjoys a market-leading position in the Canadian active-wear market.

lululemon sells its merchandise through 33 company-owned specialty retail locations, primarily in Canada with a presence in the US, Japan and Australia. Store openings and strong same-store sales have significantly contributed to the company’s rapid growth. lululemon has successfully doubled revenue and earnings annually for the past four years.

In connection with the investment, former Reebok CEO and Advent Operating Partner Robert Meers will be named the new CEO of lululemon athletica. Mr. Meers’ extensive consumer and retail experience will be important in leading the company through its aggressive US expansion plans.

“We will continue to provide products that reach a well-educated, athletically driven person who want to create a great life for themselves,” said Chip Wilson, lululemon founder, Chairman and Chief Product Designer. “We like the Advent/Highland group because of who they have brought to the table. The expertise of the Board and management will ensure that we are successful in the US and worldwide.”

“Advent proactively pursued an investment in lululemon because of its leading product offerings, inspiring culture and impressive growth characteristics,” said David Mussafer, a Managing Director at Advent International. “The broader introduction of lululemon’s technologically advanced products to the underserved women’s athletic segment presents a tremendous opportunity for the brand not only in North America but globally.”

According to Steven Collins, a Principal at Advent International, “lululemon is one of the strongest new athletic brands to develop in recent years. We are excited to join with Chip Wilson and Bob Meers to further the reach of the brand and accelerate the company’s strong growth.”

The women’s sports-apparel industry is approximately a $15 billion market and 25% larger than men’s active wear. With impressive double-digit growth in this segment and a product designed with women in mind, lululemon is well-positioned for further expansion. To increase its presence, the company plans to expand on its four existing US stores and open 15 new US locations annually over the next five years.

Product innovation will remain a key priority as the company builds on its heritage of providing products for consumers who choose to lead a healthy and balanced lifestyle. lululemon has built considerable brand equity among yoga fans, and with the number of yoga participants in the US jumping more than fivefold from 3 million in 2000 to 16.5 million in 2005, growth opportunities for the business are excellent.

In connection with the transaction, Messrs. Collins and Mussafer will join the lululemon Board of Directors. Tom Stemberg, founder and former CEO of Staples and venture partner of Highland Capital Partners, will also join the Board. Pepper Hamilton served as the legal counsel and PricewaterhouseCoopers LLP provided accounting services to Advent International. Sean Morrison of Capital West Partners served as the investment advisor to lululemon.

lululemon is Advent's second investment in the active-wear market this year following the April 2005 buyout of Fat Face, the UK's leading retailer of active-lifestyle clothing. Other investments in the specialty retail sector include: Dollar Express, a US single-price retailer acquired by Dollar Tree Stores (Nasdaq: DLTR); HMV Group (LSE: HMV), one of the world’s largest retailers of music, books and videos; Kirkland's (Nasdaq: KIRK), the US specialty retailer of decorative home accessories; Poundland, the UK’s No. 1 single-price discount chain; Dufry, a leading global travel retailer; ILVA, a Danish contemporary furniture retailer; New Look Group, a UK-based women's value fashion chain; and Tweeter Home Entertainment Group (Nasdaq: TWTR), America's premier specialty retailer of consumer electronics.

Contacts


David Mussafer

Managing Partner and Co-Chairman of Executive Committee, USA - Boston

T: +1 617 951 9400
Office details

Steven Collins

Managing Director, USA - Boston

T: +1 617 951 9400
Office details