Businessweek Extra - David Mussafer & Calvin McDonald

of course. But underneath all of that is a long conversation that I had that really no one's had before, at least in public, with David Mustafer. He is the lead director over at Lulu Lemon, and Calvin McDonald the relatively new CEO. He's only been in the Seed about a year and a half or so. This is a company that has gone through a massive transformation, all while becoming one of the most influential retailers of our time. How, for lack of better term, sort of broken was it

when you sort of got back in? I mean, I think the business was had its challenge is but at the core the issue was alignment. And so part of the power that that private equity can bring is that alignment and so in this case, we had a situation where the founder wasn't aligned with the board and the management team, and so you've seen some turnover of the senior management. You also didn't have the company uh in

sync with the ability to make investments. They were following Wall Street and thinking about what they needed to do that quarter. And so I feel like what we saw as this fundamental opportunity was to help regain that alignment and put the platform in place so that the company could establish a really strategic proposition, not just here and now, but part of the real opportunity is to help them get out of the penny a share game, uh, you know,

and make some of these investments that had deferred. Right. I want to get to the moment where Calvin you come into the company, but sort of leading up to that, you do have a series of of C e O s um so leadership becomes something at the at the top level that you also have to deal with in

terms of the the various issues you have to address. Well, firstly, we had a situation where the board really was interested, loves this company and wanted to see its succeed and so in that regard, when we came back, we were able to create some of that alignment pretty easily and help create the um, the ability to put some of these ideas in place, the idea of a longer term plan.

But you're right, I think some of those challenges with the founder made it hard and so UM at the point that that the founder exited the company in two thousand fifteen, we were really able to begin assembling a world class management team and so UH with a CFO who is initially with Stewart now CEO, and then talent along the way, leading to people like Glenn and Calvin and Son and a host of really world class business leaders. And the exciting part is that this business had that potential,

it just needed the opportunity and the the framework. From this point and beyond, it really feels like the business is just getting started. And so at that moment where you where you do start to dig in, Calvin, I mean, what's what's the opportunity do you see to sort of take it to the next level. So for me, the first assessment was as an opportunity here to be even more than what Lululemon is, not just with the North

America but internationally. UH, and I think the clear resounding answers. Absolutely. I mean, the vision we have today is to knite a community of people to live the sweat life UH.

And we're going to express that not just through incredible product that will keep developing because there's so much opportunity and white space for us to develop into, but also through our strategy of events on what we do with our grow initiatives and seeing what Calvin and the team have already done with the manifestation of this some of this next step vision in Chicago and with the membership and loyalty program, you already are beginning to see some

of the seeds of thinking about what the broader vision might look like. And so what does that look like going forward? Because it does feel like we're at a very interesting moment in the world of retail. We have

a huge runway of growth. UM. Not only is our women's business continuing to grow at double digit, with a lot of growth opportunity being entering into new categories or we mentioned to and from OTC that doesn't even really in our women's UH category exist UH and into our omniguest experience with our digital platform, and as good as we are, there's a ton of opportunity to even more.

This is an emotional brand, and our online continues to be more transactional, and then finally, you know, expanding into markets. We still have a lot of opportunity in North America, not to mention what's happening internationally and in Europe as well as in China. We feel we're early innings and everything we're trying to create through you know, we're going to double our men's business, proven that this brand resonates as much with women as men, which is super exciting

for our category. It's a dual gender category. Absolutely, there's no reason why we would be able to do that. What's the private equity lesson here, David? I mean, what do you take away as you talk to your investors, as you talk to your partners? I mean, this will stand out clearly as a a lesson to some extent in doubling down in a lot of ways going back in UH, is it replicable? Like, what's the what do you take from this that you apply to future investments.

We don't have the expectation that all of a sudden magic happens just because we've been a successful with a particular investment. But the thing that I think we began to get excited about is the power of the alignment that we could bring. In this case, we only owned of the company, and yet we were able to work with the management team and the board and then ultimately the shareholders to create a really powerful runway for this company.

And I think the idea of of thinking about how we might be able to do that more broadly is something that we've begun thinking. UH those propositions through our phone is ringing, and so in this regard, I think the idea that there shouldn't be any arbitrary boundaries between a private company and a public company. The idea of applying this longer term UH strategy and approach is what

a lot of these public companies need. Not every situation will will be applicable, but that's at least part of the thing that we've kept an open mind around well. And I do wonder about that in the same way that it feels like we're at an inflection point of sorts around experiences and lifestyles and things like that, where it's something at an inflection point for private equity where people are asking a lot of big questions around you know,

adding value, you know, looking beyond the bottom line. We're hearing that from the Business Roundtable and others. What does private equity look like going forward with this? You know, you've got a couple of fresh pools of capital to deploy at this point. What are people looking for from you?

I mean, I think that people are rightly concerned that we're at the peak of the economic cycle, and what does that mean as you're leaning into a private equity industry that's grown really rapidly over the last ten years. And so one of the things that I think has given uh ME some comfort is seeing that the industry

learned a lot from the last downturn. And so while you're always going to have pressure, I think there's been a tremendous strides that our industry has taken to really lean into really savvy operational strategies for their companies and so really thinking like an industrialist as opposed to a financier. And that vision is part of where private equity can help think about best practices. We get the benefit with seventy five portfolio companies that we have around the world.

We're eager to bring any of these best ideas to our companies as soon as we can. That was David Mussifer Lulu Lama lead director and Calvin McDonald Lulu Lemon ceo. It was a really fun conversation. We met at one of their stores here in New York City before regular business hours, so you sort of get to get a sense of all the merchandise. Clearly a bigger focus on men, a bigger focus on growth. This is a company that in many ways has defined the way we dress, do

any shopping. I didn't, not this time around. Not this time around. You've been listening to the Bloomberg Business Week Extra, be sure to tune into Bloomberg Business Week Radio Live Monday through Friday to be in Wall Street time on Bloomberg Radio. I'm Carol Masser and I'm Jason Kelly. This is Bloomberg