Say athleisurewear and one name comes immediately to mind: Lululemon. For athletic wear, one name dominates the conversation, Nike
NKE
Vuori is far behind the leaders in both realms, but then the market share leaders had a big head start. Joe Kudla founded Vuori only in 2014, while Lululemon got started in 1998 and Nike back in 1964.
But Vuori aims to become a brand as big if not bigger than those market leaders:
“Vuori wants to be a relevant household name 20 years from now. We have no interest in growing really, really fast just to hit some number and then falling out of favor with consumers or having a major quality issue,” Kudla shared with Retail Dive.
Slow And Steady Wins The Race
Kudla has followed a methodical path to growth by correcting mistakes and filling whitespace left by the big guys. That strategy propelled it forward fast to reach a valuation of $4 billion in late 2021 after receiving $400 million in venture funding by Softback Investment Advisors and Trinity West Venture, according to Pitchbook.
Now, Bloomberg reports it is considering an IPO this year, though the company has not confirmed the rumors.
Nonetheless, Kudla has accomplished much with Vuori in its ten short years. Before becoming an entrepreneur, he was working as an accountant and had little fashion experience, though he did a modeling stint for a few years, which gave him a passion for the business.
It was as an athlete, particularly his mountain climbing experience, where he found the business opportunity: filling the performance gap in men’s athletic apparel. And the company’s name came from those roots: Vuori is the Finnish word for “mountain.”
The brand’s first product was a simple pair of men’s shorts made from super-soft, high-quality fabrics that look good enough to wear around town, but also provide support and wick away moisture when running the track. And whether in town or on the track, the shorts were super-comfortable to wear.
Vuori became an instant hit with athletes who valued its superior quality and didn’t want to be a walking – or running – billboard for another brand. By year two, it was generating $1 million in DTC revenues and even more remarkable for a startup, it was profitable, credited to Kudla’s accounting background that kept him fixated on the books.
“We never acquired a customer at a loss,” Kudla shared with Fast Company. “We were hyper-focused on cash flow, and getting the unit economics of a transaction profitable.”
Reaching Further
Growing buzz about the brand put it on REI’s radar, which after testing it in a few stores, found such strong customer affinity that it put it into more than 150 locations.
By 2018, Vuori was generating upwards of $30 million in sales, much of it coming from wholesale distribution, which generates less revenue than DTC but gives a brand credibility and added exposure by having a respected retailer choose to carry it. Currently, it’s retail partners include Nordstrom
JWN
It was also in 2018 that Vuori launched into women’s apparel, reaching the other half of the athletic apparel market, estimated at $158 billion in North America in 2023 and expected to grow 6% CAGR through 2027, according to McKinsey.
That combined with opening its first store in hometown Encinitas, CA got the brand’s flywheel humming. Currently, it operates over 50 stores in 17 states and internationally in London, Shanghai and Seoul, up from just four in 2019 all located in California. Plans are to open 20 to 25 stores over the next two or so years to reach 100 by 2026.
Tasked with that mission is vice president of retail Catherine Pike who joined the company in 2019. A lawyer by training, Pike came from fitness franchiser Fit4Mom where she led franchise operations and before that, she spent eight years with Lululemon, rising from local store to regional manager.
Values-Driven Profits
Pike’s experience at Lululemon was a good training ground for her role at Vuori, but it also sensitized her to the importance of stable leadership and the supportive corporate culture that nurtures. Most of her time at Lululemon, from 2008 through 2016, was spent under the quixotic and outspoken – often in a bad way – founder Chip Wilson, who was forced out of the company in 2013.
“I wasn’t quite as involved as I am now at Vuori, but I could feel all that tension,” Pike shared with me. She is more than happy to have found a home where she and the company can thrive.
It’s stated mission: “Vuori is dedicated to making quality products that empower deeper connections with fitness, nature, creativity and community.”
And Kudla’s purpose:
“We strive for transparency in our products, our processes and business practices. We seek to provide visibility into our supply chain and to run our business with strong ethics and data privacy standards. We also seek to take accountability for the environmental impact we have on this planet and communicate this to our community by sharing our vision, goals and progress—every step of the way.”
Operating an ethical business is key to the company’s success; it walks the walk, rather than just talks the talk. For example, Kudla told Retail Dive that most of the $400 million cash infusion it recently received went to payback early investors who “believed in the vision from day one.”
Building Community
The philosophy in opening and operating stores is to create a place where the Vuori community can gather. “When Joe and I started talking about the future of stores, we wanted to follow the model established in Encinitas where it functions more as a gathering space than a store. We want to create hubs for the community in every place that we go,” she said.
In addition to sponsoring yoga and fitness events, an important part of the store experience is to give people a chance to touch, feel and try on the product. Despite seeing the products online and hearing about it from their friends, it isn’t until people actually experience the clothing that Vuori’s distinctive performance difference becomes real. And an added bonus: its prices generally are lower than Lululemon’s.
“They experience a light-bulb moment where they’re like, ‘I didn’t know it could be this good,’” she added.
Following its first touchdown in New York City’s Soho district in 2022, the company opened an Upper East Side store on Madison Avenue in late December and a third Massachusetts store just opened in Dedham. At the end of March its first store in Long Beach, CA will open and in April, it will come to Pennsylvania for the first time on downtown Philadelphia’s Walnut Street.
Pike reports directly to Kudla and works side by side with the company’s other three channel leads, who oversee the online store, wholesale and international divisions.
“We all think of our customer as an omnichannel customer and we have conversations all the time through that customer lens and what’s best for them,” she declared.
“We’ve built an ecosystem that works beautifully together in real partnership among ourselves, our retail partners and with our customers. We celebrate those relations and partnerships,” she added.
Doing What’s Right
While still a private company, it doesn’t reveal sales data, other than a few snippets here and there, but in 2021, Kudla told Retail Dive the company had been growing at a 250% CAGR since the beginning, and doing it profitably.
“We are very conscientious to not grow too fast, and there’s already so much demand for our brand in the marketplace that we want to make sure we’re continuing to look at our growth and look at the business through the lens of like a 10, 15, 20-year operating model,” he said.
“We want to do it the right way. We want to identify the right real estate. We’re only going to do business with the right wholesale partners that make sense for the brand. And we’re going to continue to nurture that direct relationship with the customer,” he concluded.
Read the full article here