Anyone who has ever worked in retail knows how vital it is to have a good inventory tracking system -- it allows stores to keep track of what's selling, plan for future stocking and, if they make their own products, see where to invest and expand.
Known in retail as an RFID solution (standing in for Radio Frequency Identification), the most commonly-used inventory tracking system uses tags to locate items using radio frequency waves. It's frequently worked into the price tag both for security and inventory-tracking but may occasionally show up in the large plastic tag of times past -- many of us may remember having one left behind in a new sweater and beeping everywhere you went that day.
In 2019, Walmart (WMT) instructed all suppliers of its apparel, footwear and eyewear products to use this RFID while Nordstrom (JWN) issued a similar mandate to its suppliers last year.
A New Cloud System for lululemon
The largest producer of RFID inventory tracking systems is a Dutch company called Nedap (NDDLF) -- its market cap was, at last check, at 362.2 million euros ($391.62 USD).
While lululemon (LULU) already used Nedap's iD Cloud software at 400 of its stores in North America, the sportswear giant just announced that it is expanding to more than 600 stores globally.
"With Nedap's iD Cloud solution, we can leverage real-time, accurate data to enable our in-store educators to spend even more time engaging and connecting with our guests," Carl Barker, lululemon's VP of global omni products, said in a statement. "Having a fully mobile cloud solution in our stores greatly contributes to this experience."
According to lululemon, the expanded partnership will allow the company to get information on which products were seeing strong demand and restock it before the customers have even left the store.
The solution has already allowed lululemon to track whether it had the "right product assortment available" in stores across North America but will now expand to locations in Europe, Asia, Africa and the Middle East by the end of 2023.
"Online, RFID continues to elevate our digital experience, offering accurate real-time store inventory visibility and powering key fulfillment experiences such as buy online, pick up in-store," Barker said.
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Lululemon's Outlook For 2023 Is (Largely) Sunny
Over the nearly three years that have passed since the start of the pandemic, lululemon has gone through a number of changes. As more people worked from home, lululemon saw steady sales even as brands specializing in non-athletic sales floundered.
The formerly clothing-only company recently launched its first shoe line and experimented with a new lululemon Studio program that gives members access to a hybrid model of both virtual and in-person fitness classes.
But by the time the world emerged from the pandemic, lululemon found itself in a sudden downturn. Lululemon stock is hitting multiple-month lows after executives reported slightly contracted margins during its last earnings call.
Estimates of fourth-quarter earnings were also brought down to $4.22-$4.27 from $4.20-$4.30 per share. Amid inflation and after a few years of people buying up their clothing, the holiday season did not bring in as much as its executives might have hoped.
At $312.69 as of this writing, lululemon stock is down just over 7% since this time year ago but up nearly 300% from five years ago.
