Lulu’s Fashion Lounge Eyes IPO Value Of Up To $707 Million

Mode‘S rush to Wall Street continue with data savvy Lulu Mode Lounge Holdings Inc.

Chico, California-based digital native has established initial public offering ranges from $16 to $19 per share — valuing women’s fashion brands at $595 million to $706.6 million.

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Lulu plans to sell 5.8 million shares to the public, which translates to a yield of about $89 million at the midpoint of the $17.50 offering. The company plans to use the money to pay off a $71.4 million term loan and redeem $17.9 million in preferred stock.

The process, which is guaranteed by Goldman Sachs & Co., BofA Securities and Jefferies, will put the company in open market trading on the Nasdaq under LVLU.

Lulu’s arrived on the scene with the IPO party already raging — the odd combination of a blazing hot stock market, unexpectedly strong pandemic consumers, and a love of all things digital that had drawn the company to market.

Already Rent the Runway, Olaplex Holdings, Warby Parker, On Holding and many others have gone public. All birds are expected to join them immediately.

Lulu’s offering will be considered an introduction to many in the industry as the company, founded in 1996, operates mostly under the radar.

The company took a major hit during the first year of the pandemic – revenue fell 32.7 percent to $248.7 million last year on a loss of $19.8 million. But Lulu started to recover in the first half of the year. Sales increased 23.6 percent to $172.5 million over six months on a net profit of $4.2 million.

“Unlike traditional retailers, we leverage a ‘test, learn and rebuild’ strategy to bring hundreds of new products to market every week; we test it in small batches, learn about customer demand and then quickly reorder the winning product in higher volumes to optimize profitability,” the company said in its registration statement filed with the Securities and Exchange Commission. “This strategy allows us to quickly turn new products into profitable, consistent and repeat sales while minimizing fashion and trend risks.”

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Lulu averaged 236 new products each week during the first half. The brand had approximately 2.5 million active subscribers during the 12 months ending October 3. The average retail price per unit is $50, which the brand describes as “affordable luxury.” Lulu considers herself a style agnostic, but is known primarily for her Gen Z and Millennial-focused dresses and event outfits.

Since April, Lulu has been led by CEO David McCreight, who was previously CEO of Urban Outfitters Inc. Anthropology Group. and previously was president of Under Armor Inc.

Once in office, HIG Growth Partners will continue to own 35.1 percent of the company’s shares. Institutional Venture Partners and the Canada Pension Plan Investment Board will each own 17.9 percent of the shares.

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