Lulu

It uses its own proprietary reorder algorithm to optimize inventory management. The increasing revenue trend is a result of its active customer base expansion.

The EV/EBITDA multiple of 11.5x of the firm is close to its sector median of 10.54x. Although the firm is heavily investing in its growth, it has to travel a long road to attain brand recognition in a highly competitive and volatile fashion industry. Due to its poor financial position, the firm is unable to operate efficiently at the moment. According to the October 2022 10-K report, the firm aims at growing its customer base and building a brand in foreign markets. On the long-term basis, the firm's debt to equity ratio is around 0.6 which decreases the threat of solvency. In my opinion, while global customer base expansion is fruitful for the long-term, LVLU should, at present, focus on building a firm base in the US. The firm’s active customer base increased from 2.5 million in October 2021 to 3.2 million in October 2022 on a trailing twelve-month basis (TTM). It is likely that LVLU may have retained the majority of its customers while increasing its active customer base. This data-driven strategy is particularly beneficial in the fashion industry as it helps in predicting the likelihood of the repurchasing of an item. This is crucial because a growth firm like LVLU, that caters to the personalized needs of its customers, cannot afford to have an outdated inventory. Moreover, the marketing strategy includes these social media platforms to engage with its customers in a personalized manner. Despite these concerns, the firm is growing its customer base.