How Yogawear Retailer Lululemon Stocks Less But Sells More

It's time for retailers to stop using the economy as an excuse for stagnant sales or lagging profits. Smart operators are already posting substantial growth again. Exhibit A: Vancouver-based yogawear chain lululemon athletica (LULU), which saw sales shoot up more than 50 percent last year.

They didn't achieve that growth simply by opening a zillion new stores, either -- sales at existing stores were up nearly 30 percent in the critical holiday period.

How did they achieve this impressive growth at a time when consumers have barely increased their spending in recent months? By walking a mile in their most important customers' athletic bras.

They're not just listening to the odd customer who happens to fill out a comment card, they're offering 15 percent discounts to style-setters in their industry -- namely, fitness instructors. Recently, they've been able to parlay their customer data into the creation of a sharp new fashion line that shoppers snatched from the shelves.

For comparison, other sportswear competitors have had a tougher time. Both Columbia Sportswear (COLM) and The Finish Line (FINL) saw nearly flat sales last year.

Knowing more intimately what customers want also allowed lululemon to drastically shave their inventory levels, as they could stock just what would sell and not more. Holding less inventory helped spike net profits nearly 50 percent for the year. In the fickle world of fashion, it really pays to make a habit of regularly asking key customers what they want.

Photo via Flickr user lululemon athletica