This Week in Business: Reports from Lululemon, Dollarama; Apple shakes up streaming Music game

Apple enters the streaming music game, taking on Spotify and Pandora; Chip Wilson might sell his estimated $1.3 billion stake in lululemon

Lululemon Athletica led Canadian business headlines this week – both with its quarterly revenue reports

Lululemon Athletica led Canadian business headlines this week – both with its quarterly revenue reports



Lululemon Atheltica led Canadian business headlines this week – first, with the company’s quarterly revenue report, and then with more news from its (in)famous founder, Chip Wilson.

On Tuesday, lululemon released its Q1 earnings, which it says were above its own expectations and helped along by another tundra-like winter across the country – except in its hometown of Vancouver, of course – and strong e-sales.

“Certainly weather was an issue in the early part of (the quarter), which likely benefitted the e-commerce results,” lululemon CFO Stuart Haselden told reporters (via CTV News). “We were able to have a better inventory position in e-commerce which I think drove the upside.”

In the company’s press release, lululemon said “store sales” decreased by one per cent while “direct to consumer” increased by 31 per cent.

Haselden said the upped revenue is “sustainable” and lululemon expects sales between $2 and $2.05 billion for 2015 – that includes a projection of $440 to $445 million for the year’s second quarter.

Chip Wilson considers selling lululemon stake

Chip Wilson, the lululemon founder whose role with his company has shrunk in the past two years, is considering selling his (estimated) $1.3 billion stake in the yogawear giant, according to a report from Reuters and Euan Rocha (via Globe and Mail).

Wilson has also founded a new retail chain, Kit and Ace, a “technical luxury” clothing company with locations in Vancouver, Calgary, Toronto, New York, and several other cities in North America.

Kit and Ace plans to open a second store in Vancouver – on West 4th, to add to its current Gastown location – and a store in Victoria. The sale of Wilson’s lulu stock would give him more gold to toss into Kit and Ace, Rocha reports.

Dollarama ups its game

Discount giant Dollarama saw its revenue increase by 22 per cent in the first quarter of 2015 – compared to 2014 – according to the company’s Wednesday report.

The spike in Dollarama’s revenue – with profits reported above $64.8 million so far, for 2015 – as well as improved business for Hudson’s Bay might prove the only safe place for Canadian retail is on the poles. You’re either going to sell cheap or you’re going to sell high – there’s no place in between, for companies like Sears or Reitmans, writes Global’s Jamie Sturgeon.

“The high- and low-ends of the retail market place are flourishing while the middle chips away,” Sturgeon writes. “It’s just now becoming clearer to casual observers.”

Welcome to Music, Apple

The fruit that keeps feeding has finally entered the streaming music game – a clear decade after it revolutionized the stale music game with the iPod and iTunes – with the announcement of ‘Apple Music’. The new service will be a $9.99 per month “music-purchase app, a streaming app, a radio service, and a social network,” reports the NY Times’ Farhad Manjoo.

Music was unveiled at the company’s now-well-known keynote style, with the Apple oracles on-stage and their big, fluid screen behind them. Their entrance into the market is seen as an obvious move to steal space from Spotify and other streaming or digital audio services, where its own iTunes Radio is already competing with Pandora and others, even free providers like Soundcloud and YouTube.

(In a since-deleted, two-word response, Spotify CEO Daniel Ek took to Twitter to post “Oh ok” after Apple’s presentation on Monday.)

“When it comes to streaming music, is Apple arriving too late or right on time?” asked Ben Sisario, the week before Music’s unveiling. “Spotify, for example, the largest streaming service, started in 2008 and has signed up 60 million users around the world, 15 million of whom pay for monthly subscriptions.

“At the same time, analysts say, Apple’s sheer size and reach — it has sold over 700 million iPhones alone — gives the company an advantage over every other player, and may allow it to dominate a fast-growing market.”

It’s a case of the elephant waiting until the moment’s right to roll over, perhaps, knowing it has the resources to enter and quickly overtake a proven industry once it’s proven.

(“We’ve had a long relationship with music,” said Apple CEO Tim Cook, at the corporation’s keynote (via The Verge). “And music has had a rich history of change, some of which we’ve played a part in.”

It will come with cynicism of course, perhaps warranted. Although Manjoo expressed excitement for more added features to Apple’s overall iOS system, he said the Music reveal previewed a less-than-innovative product – “it looks like a mess of services and interfaces crammed into a single screen, though perhaps just the demo, and not the product, was to blame,” he wrote (link above, NYTimes.com).

Other headlines:

The International Economic Forum of the Americas is being held, starting in Montreal on Monday and ending Thursday, where the World Bank has called for both end to “extreme poverty” and “Universal Health Coverage”, both by 2030.

“Universal health coverage is a triple win: It improves people’s health, reduces poverty, and fuels economic growth,” said the Bank Group’s CFO, Bertrand Badre, in his pre-released speech to the Forum.

He added that Universal Health Coverage in vital “to ensure that everyone has access to essential, quality health care, regardless of their ability to pay.”

via WorldBank.org

**********

Former Canadian superhero Jim Balsillie, the once-chief of BlackBerry and Research in Motion, told a Toronto business crowd about the several fatal blows dealt to the smartphone company – blows from itself, really, with the “rushed” Storm phone.

The Storm was released by BlackBerry to compete with Apple’s touchscreen iPhone – a now-standard requirement of any player in the smartphone market, far from the keyboard days of 2010 and before.

“With Storm we tried to do too much,” Balsillie told the Empire Club in Toronto. “It was a touch display, a clickable display, it had new applications. It was all done in an incredibly short period of time and it blew up on us.

“That was the time I knew we couldn’t compete on high-end hardware,” he said.

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