After several years of cost-cutting and right-sizing, apparel companies are expanding internationally, building better flagship stores, and investing in their strongest brands. Read up on the 50 leading publically-traded firms, ranked according to profit margins.
#1 lululemon athletica
It turns out that namaste
means “really big profits.” Who knew? While its customers rest comfortably in shivasana
(that’s the final yoga pose), lululemon is achieving bliss of a different sort. To put its profit margin of 17.11 percent in perspective: in the 20 years that Apparel
has published its Top 50 report, no company has ever broken the 17 percent threshold, and just two (Wet Seal and True Religion) came even close, breaking the 16 percent threshold in FY2009, and both FY2008 and FY2007, respectively. So, what is the secret to financial nirvana? While lululemon’s soaring profits reflect an uneven economic recovery that saw high-income consumers ready to splurge on luxury items — such as $100 yoga pants — as others proceeded with caution, the company’s success also stems from its relentless focus on customer and product. Yoga instructors offer in-store classes (and drive brand awareness) while behind the scenes the company has grown its men’s clothing business and rapidly expanded into running wear and other new categories such as bags, underwear and outerwear, while not losing sight of its core yoga business. Last year it introduced Silverescent, a line of yoga performance wear with silver-thread odor-fighting technology for easy transitioning from the gym to Starbucks.
#2 The Buckle
Buckle up for another great ride, as this denim destination turns in another fantastic performance, with net sales up 5.7 percent to a record $949.8 million and net income up 5.8 percent to $134.7 million. 2010 also marked the 4th consecutive year of positive comp-store sales, which were up 1.2 percent. Buckle’s private-label brands continued to flourish, growing from 29 percent to 33 percent of the business, and expanded to include new offerings and several brand extensions, including the expansion of bestselling brand BKE across all product categories. Building on its reputation for exceptional customer service, the company expanded its loyalty program by partnering with key brands to offer one-of-a-kind promotions, and enhanced its personalized shopping program, Get Fitted, with the addition of call-ahead shopping appointments. Buckle completed its new 240,000-square-foot DC in Kearney, Neb., opened 21 new stores and completed 25 full remodels, while also focusing on the online experience, helping to grow buckle.com sales by 19.3 percent to $62.4 million, or 6.6 percent of net sales.
To read about all of the Top 50 companies, download the report now.