In this articleLULUFollow your favorite stocksCREATE FREE ACCOUNTWhen athleisure brand Vuori launched in 2015, it was headquartered in a garage, sold only men’s shorts and couldn’t get investors to give it the time of day. Now, the Carlsbad, California, retailer is expanding globally, backed by a string of marquee investors including General Atlantic, SoftBank and Norwest Venture Partners, after raising $825 million in November in a funding round that valued the company at $5.5 billion. It’s become the envy of incumbents such as Lululemon, Gap’s Athleta and Levi’s Beyond Yoga, and it’s poised to be one of the retail industry’s biggest IPOs when it eventually files to go public, which people close to the company say it plans to do.”It’s a notable deal for the category it’s in … you haven’t seen many deals in that market at all over the last couple of years, and the deals that have happened have been more, I’d say, challenged, or more at value-oriented situations,” Matthew Tingler, a managing director in Baird’s global consumer and retail investment banking group, said of the recent funding round.”Vuori’s bringing a lot of excitement and growth to the market,” added Tingler, an expert in the athletic apparel space who wasn’t involved in the transaction. “In ways, they’ve been taking share in that athleisure market broadly … they’re challenging the legacy players of Athleta and Lululemon.” Vuori’s store in the Flatiron District of New York City.Natalie Rice | CNBCAs Vuori went from a no-name brand to one of the most highly valued private apparel retailers on the planet, it saw robust sales growth and consistent profitability, winning over consumers in a crowded space with its coastal California take on athleisure.”Vuori competes on a differentiated product, a differentiated brand, a differentiated store experience, differentiated materials,” Vuori CEO and founder Joe Kudla told CNBC in an interview. “If you were to just survey our customer base [and ask], ‘Why is Vuori so special?’ They would tell you it’s because of our product, it’s because of the comfort, the textile, the fabrics we work with, and the fit. We are all about product, product, product, and that’s ultimately what results in great performance in our industry.” Despite its success, Vuori faces challenges ahead. The company operates in a crowded athleisure space that analysts aren’t sure will grow as quickly as it has in the past. Some see it as one of the fastest-growing apparel categories, while others expect it to slow as consumers look to dress up after years of dressing down.Customers also seem to be worrying about whether Vuori’s products will stay the same as it scales and faces the demands of being a publicly traded company.”If you go look at message boards right now, the thing that consumers of Vuori are most concerned about is, is the quality of the fabric going to fall?” said Liston Pitman, a strategy director with Eatbigfish and an expert in challenger brands. “Are they going to water down the brand that I love as an exchange for growth?”Vuori’s Flatiron store.Natalie Rice | CNBCPlus, Vuori faces the same issues as other consumer discretionary companies. Retailers have been forced to work harder to win customer dollars, and demand has been unsteady as consumers think twice before buying things that may be wants rather than needs.Vuori pulls ahead in the yoga warsSince it is still private, not much is known about Vuori’s financial performance. But analysts estimate that it generates around $1 billion in annual revenue, and the company says it has been profitable since 2017. While its sales are a fraction of the $431 billion global athleisure market, Vuori has seen steady growth and has outperformed the overall sportswear market at …
