Vuori - Collection of Apparel Brands

Inspired by coastal California lifestyle, Vuori has built a $4B business offering premium high-performance activewear for both men and women.

Feb 09, 2022

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Snapshot

Founded in 2015, Vuori is headquartered in Encinitas, California, United States. It is an active lifestyle apparel brand that makes premium performance clothing inspired by the coastal California lifestyle – an integration of yoga, surf, sport, art and a strong visionary spirit.

Today Vouri has become best-known for its offering of high-performance activewear that is both “beach and weekend-ready.” The company is a D2C company and also has a healthy wholesale operation, a few physical stores of its own and has raised $445M over 2 rounds of funding to date. In October 2021, Vuori was valued at $4B.

About Vuori: Website, LinkedIn

Business Overview & Products

Vuori offers a collection of apparel brands for both men and women. It started by focusing on clothing that could be worn for workouts and outdoor activities, but now it has expanded its categories for outdoor, swim, travel and commute. Some examples of what Vuori sells include shorts, pants, tops, graphic T-shirts, gift cards, hats, and clothing for yoga instructors, surfers, crossfit instructors, personal trainers and individuals.

Its products are offered through dealers in San Diego, Del Mar and Solana Beach in California. More specifically, Vuori currently sells through Nordstrom and REI, and about 500 other specialty dealers across the US.

How It Works

Since the beginning, Vuori’s strategic goals have centered around acquiring new customers, building its brand awareness, and increasing sitewide revenue. It started out using paid social media marketing through apps such as Facebook and Instagram, native advertising, and putting catalogs in the mail to acquire customers. Then in 2016, Vuori partnered with digital marketing agency CPC Strategy to form a holistic marketing plan to optimize its online ad campaigns across multiple selling channels.

Vuori does not compete in the mainstream sectors of basketball and football. Instead, it focuses more towards people participating in slightly less sought activities like yoga, surfing and running. The brand was created keeping in mind there were very few labels offering good yoga gear for men, besides Lululemon.

According to the founder, in making its versatile gear, the fabrics that Vuori uses are 2x-4x the cost of the fabrics used by big active brands on average. The aim is to work with better materials and better construction, resulting in gear that has a more modern and athletic fit. Since Vuori’s direct business is a significant part of its distribution strategy, it is able to absorb the additional cost and not pass it off to its customers.

Business Model & Pricing

Vuori utilizes both its DTC method, which is the largest part of its channel, as well as specialty dealers to distribute its product. The founder credits the role of the dealers in scaling the brand extremely fast, by merchandising Vuori’s product well, along with following its pricing and promotional agreements.

Vuori’s clothing costs more than the clothing available at an average local sports goods store, as it specifically caters to Californian styles that most other activewear brands lack. Yet the pricing is in line with what one can expect from Lululemon, Rhone, Prana and similar competitors. For example, the company’s clothes sell between $32 for shirts and hats to $188 for its most expensive jacket. So while being reasonable, Vuori has also positioned itself in a premium performance category.

Traction

In the words of the founder Joe Kudla, at the moment Vuori does not need the $400M it just raised for launching its growth strategies. In fact, “most of this money is going to reward early shareholders that believed in the vision from day one.” The funding will also be invested in infrastructure and technology, as well as to grow an executive team via rapid hiring.

Vuori’s trajectory also remained good during the coronavirus pandemic. The company had about a 100 employees when the pandemic began, but now has 450 and is expected to reach 1,000 in the next three years. This was be validated by Kudla in an interview from August 2021, where he talked about how Vuori thrived during the lockdown because it was essentially selling a product that people could still use indoors. According to him, Vuori had been growing at a 250% compound annual growth rate since its inception, and during the pandemic its fitness sales category tripled instead of the projected doubling of sales. By the end of 2021, the company is on pace to have achieved 140% growth. Furthermore, it is very profitable and does not need external capital for growth at the moment. Kudla also pointed out that in 2022 the company plans on opening about 15 stores, compared to its competitor Lululemon opening 35 to 50 stores in a year. In his words, Kudla does not need this kind of effort to meet its goals.

He shed further light on the future goals of Vuori. Having achieved widespread loyalty from consumers in the US, the brand will begin its international expansion next year. It will launch an omnichannel business in key markets throughout Western Europe and Asia Pacific, and an innovation center in Taiwan. While growing its global distribution, Vuori will double down on retail expansion in the US with more than 100 store openings planned for the next five years.

Founder(s)

Joe Kudla: Founder and CEO of Vuori Inc. Kudla spent some time traveling for his modeling career, which acted as inspiration for Vuori. Kudla then leveraged his unconventional background and personal reasons to launch Vuori in 2015.

History and Evolution

As an athlete who had played a lot of football in his life, Kudla began dealing with a lot of back pain some years before Vuori was launched. It was his decision to take yoga classes when he first realized he did not really know what men were supposed to wear to yoga. This led him to identify a gap in the market where women’s fitness clothing had been the highlight for many brands but men’s clothing had not. At that time Lululemon was a big deal and became wildly popular with women, but the brand treated men’s gear as an afterthought.

This led to the founding of Vuori by Kudla in 2015. For this he raised $2.5M from his family and friends to launch the business out of his garage in 2015. Vuori teamed up with CPC Strategy in April 2016 to improve its Facebook and Google Shopping advertising efforts. The digital marketing agency worked closely with Vuori’s team to establish a holistic marketing plan to optimize their online ad campaigns across multiple selling channels.

Next, the brand was smart in that it instantly started focusing on what customer interests were regarding activewear. Soon Vuori began really resonating with women as well, a lot of whom were buying the brand’s men’s products. So in 2018, Vuori launched its women’s products Side by side. It also placed great emphasis on building its relationships with supply chain partners and factories rather than attempting to scale too quickly.

Today, Vuori’s success is well-known and it has been profitable since 2017, owing to its focus on creating high quality, differentiated products, and building strong relationships with suppliers and customers. In the future, Vuori plans on multiple avenues such as expanding its assortment, accelerating its growth overseas and adding more stores in the US.

Additional Learnings

Vuori is planning to expand its US store footprint over the next few years. The goal of some stores would be targeting the existing customer base that lives in the area, while other stores will be strategically placed in “active, health-conscious” communities that have not adopted Vuori yet.
According to Kudla, Vuori executives are looking to Europe, Australia, New Zealand and Asia for international expansion. Japan is a particularly exciting opportunity for Vuori as it now has access to expert knowledge on navigating that market. China is also on the radar with plans to build an e-commerce presence on Tmall next year. Thus, there are plans to open stores in both countries by 2023.
According to Kudla, the company is not looking at the wholesale business as a means to drive significant revenue growth. So while it is important, wholesale likely will not expand much beyond its current partners. Instead, Vuori will remain committed to building strong relationships with the existing partners.
Currently, the brand is partnering with organizations such as Climate Neutral and CleanHub to offset its carbon and plastic footprints. It is also taking steps to eliminate 80% of plastics from its shipping and supply chain by 2022.

Market Snapshot

Before Vuori was established, there were about 7 million men practicing yoga in the US. This number was about 30% of the country’s yoga participants because it is predominantly a female-driven activity. However, male participants were a fast growing demographic.
At the same time, Kudla researched the surf market and discovered that there were roughly 4 million active participants in the US and around a 100 brands competing for that same customer.
Two years later in 2017, activewear apparel sales increased 2% to $48B, representing roughly 22% of total apparel industry sales.
In a market report by PRNewswire posted in September 2021, following highlights were presented:

The global athleisure market size is anticipated to reach $549.41B by 2028, registering a CAGR of 8.6% over the forecast period.
Through the pandemic, the growing popularity of the utility fashion trend has spurred the demand for utility-active apparel.
The yoga apparel segment accounted for the largest revenue share in 2020 and is also estimated to register the fastest CAGR from 2021 to 2028.
North America had the largest market share in 2020. However, Asia Pacific is rapidly growing, expecting the fastest CAGR of more than 10% from 2021 to 2028.

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