Online retailer Lulus, founded by a mother-daughter team, sells everything from bohemian blouses to avant-garde gowns, relying on social media to reach many of its Millennial customers. Now Lulus is announcing that it has raised $120 million from venture capital firm IVP and the Canada Pension Plan Investment Board, an investment management firm.
The new funding will be used to expand Lulu’s data-driven efforts to deliver trendy shoes, clothing and accessories to customers in the U.S. and 68 other countries. Neither Lulus nor IVP would disclose how much Lulus is valued at following the injection of new funds.
On Instagram, Lulus has 1.3 million followers. It uses the social media app as a key tool for reaching trend-savvy teenage and Millennial women. “We make sure that when the customer opens up that product, their initial impression is, ‘I can’t believe the value I got for the price that I paid.’” said Collen Winter, the CEO and cofounder of Lulus.
Lulus traces its beginnings to 1996, when mother and daughter team Debra Cannon and Colleen Winter opened a vintage boutique, Lulu’s Fashion Lounge, in Chico, California—about 160 miles north of San Francisco. Lulus, which is based on Colleen Winter’s nickname, shifted to become an online-only retailer in 2008 and has grown tremendously since then, with a focus on fast-fashion.
In 2014 Lulus raised an undisclosed amount of funding from private equity firm H.I.G. Growth Partners. It also took on an undisclosed amount in debt financing from Abacus Finance Group, which Winter said was paid off last year. Lulus also has an ongoing partnership with business development firm Monroe Capital, which provided the company with debt financing (also an undisclosed amount) in 2016. Winter said that Lulus has “hundreds of millions in annual revenue,” and is profitable, but would not disclose further details.
“Our goal is to give our customers a bit of luxury without the price tag,” Winter told Forbes. Lulus’ attire ranges from $16 to $300, turning it into a hit with Instagram-loving customers. Winter credits the brand’s success by focusing on customer service and building an engaged community on social media.
Investor IVP has bet on other e-commerce brands such as the Honest Co. and cosmetics firm Glossier. “We are massive believers in the tailwind behind e-commerce penetration. The apparel market is going through turmoil right now,” said Eric Liaw, general partner at IVP. “Customers are shopping differently. They look for authenticity. Lulus is super-disciplined on test and measure.” Lulus tests and measures by adding 30 to 50 new items to its website every day and gauging customer feedback. “They’re not guessing, they’re actually buying what the customer wants,” Liaw explained.
Targeting a generation keen on affordable luxury with demand for off-the-runway designs, Lulus changes its inventory frequently to keep up with the short lifespan of the latest styles. The Lulus line— items designed by the company—makes up 85% of the site’s inventory. The remaining items it sells come from outside designers. “Creating the next-generation affordable luxury fashion brand has been our commitment, and that’s been our life mission,” Winters said.
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