The occasionwear brand Lulus is turning 30 this year, but its business model is continuing to evolve. After spending most of its life as a primarily direct-to-consumer brand, Lulus has been steadily expanding its wholesale business, which grew by over 140% in sales last year.
As of Tuesday, Lulus is now officially sold in all 350 Nordstrom doors, making the retailer its largest wholesale partner. Lulus has been selling in Nordstrom since 2020. In the last year, the brand has also doubled the number of Dillard’s stores it sells in, from 50 to over 100. And it has expanded its product assortment at other retailers, including Urban Outfitters.
Lulus’ svp of brand marketing, Patrick Buchanan, whose resume includes roles at Good American and K-Swiss, said more wholesale partnerships with big-name retailers will be announced this year. And the company expects its wholesale revenue growth to again exceed 100%. Notably, Lulus characterizes its retail play as an “expansion,” not a shift away from its DTC core.
“Especially in the years since Covid, young people are redefining what shopping looks like for them,” Buchanan said. “We’ve seen a surge of people, particularly young people, returning to stores, so we see wholesale as an opportunity to keep reaching newer and younger customers.”
Wholesale and physical retail are key to Lulus’ future, Buchanan said. Fifty-five percent of Lulus’ Nordstrom sales came from its physical stores in the last year.
In November, for the three months ending September 28, Lulus reported a 9% year-over-year decrease in net revenue and an 11% drop in active customers. But gross profits were up 2%, and net losses improved by nearly $5 million. Lulus went public in 2021, with a valuation of around $600 million, capitalizing on the post-pandemic boom in consumer spending. In the last year, its stock has fared well, with share prices increasing by over 120% in November.
In the earnings report, CEO Crystal Landsem is quoted as saying that Lulus is “repositioning our casual wear and footwear categories, continuing to prioritize assortment optimization, SKU reduction and cost efficiency, and strengthening our presence as a key destination for event dressing and attainable luxury.”
Wholesale is a way for Lulus to cut down on costs. It spent about $700,000 less on marketing year over year last quarter. But Buchanan said the company is aware of some of the challenges that have beset the wholesale fashion market in recent months, including the high-profile bankruptcy of Saks Global. Right now, many companies are weighing the pros and cons of further embracing wholesale channels, including the wider reach and free marketing they offer, as well as the risks of tying their fate to another entity.
Like many brands with a wholesale business, Buchanan said Lulus is taking a “fewer and better” approach to picking partners. While Lulus is sold in hundreds of doors, there are only a handful of individual retail partners — mainly Nordstrom, Dillard’s and Urban Outfitters, along with other new partners like Nuuly and Von Maur. Lulus has been expanding the categories it sells with those partners — in April, it will add daytime dresses to its Nordstrom assortment, which is currently focused on evening dresses. It will also expand its assortment in Urban Outfitters later this month.
Nordstrom has been on a kick of recruiting large, established brands that have little to no wholesale presence elsewhere for its stores. Last February, Nordstrom brought in Princess Polly, a brand with around $600 million in annual sales, to sell in 92 Nordstrom stores nationwide. It has also collaborated with other traditionally DTC brands, like the jewelry brand Mejuri, on a shop-in-shop in October.
Recently, Lulus has been using insights from its retailers to plan out marketing events on its own channels. For example, healthy sales at Dillard’s stores in Texas inspired a Lulus prom-themed event held in Dallas last February.
“We’re proud of our partners and feel they really put our product on a pedestal,” he said. “We collaborate closely, and we’re planning to do more shop-in-shops and events, and gain more insights from the stores we work with.”
Related reads
‘We’ve turned the traditional retail model upside-down’: How Lulus is redefining fast fashion
Fashion Briefing: Inside Princess Polly’s all-out wholesale strategy with Nordstrom
How Nordstrom changed its merchandising strategy for the DTC brand era
