Millennial fashion brand Lulus has closed on a later-stage capital round of $120 million.
The investors are IVP and Canada Pension Plan Investment Board. IVP is a later-stage venture capital and growth equity firm, and general partner Eric Liaw has become a Lulus board member. IVP’s investments have included Glossier, The Honest Co., Snap and Twitter. The Canadian pension fund is a silent investor.
Colleen Winter started Lulus as a small boutique with her mother in August 1996 when it focused primarily on vintage apparel. The Chico, Calif.-based business transitioned to an online platform in 2005 and became purely an e-tailer in 2008.
Eighty percent of the merchandise is imported, with the balance made domestically. The company creates in-house content for posting on social media sites, and relies on video content and brand ambassadors to spread word of the brand. According to Winter, the core consumer averages 27 years of age, lives in highly populated areas, works in an office and lives a lifestyle that goes from desk to evening social events throughout the year.
The company relies on its large database built over the years to determine what merchandise to bring in, and how much to produce. “Because we are data-driven, we have low markdowns and there is minimum trend risk and inventory risk,” Winter said.
Winter said the business has been profitable since inception. The company completed an earlier round of financing in 2004 with H.I.G. Growth Partners, which remains an investor. That round of financing helped the company build out its leadership team; add staff — the company now numbers more than 700 employees; standardize fits across the platform, and move to new fulfillment centers.
Winter said the company will use the new investment for several initiatives that include opening a second facility, this one on the East Coast in Ohio to provide faster shipping — the company’s goal is to deliver all packages within two days’ time — and expand into either new or underpenetrated categories. These include a leather line for shoes, and building out its outerwear and denim offerings.
John Kim, managing director at H.I.G., said, “Since our initial investment in 2014, Lulus has continued to demonstrate spectacular growth, and is now one of the leading digitally native brands in the United States.”
Poul Winslow, managing director and head of thematic investing and external portfolio management at CPPIB, said, “Lulus’ business is exposed to a number of long-term drivers that align with CPPIB’s thematic investing strategy. Lulus’ proven track record as a successful retailer targeted to Millennial women and as an early participant in the e-commerce space demonstrates their ability to thrive in the rapidly changing retail segment where customers are increasingly shopping online.”