San Diego’s $4 Billion Clothing Brand: Vuori (2024)

The Apparel Firm has a Marketing Strategy that Sets it Apart.

7 min read

Jan 18, 2023

Joe Kudla, founder and CEO of Vuori, grew the company from a tiny upstart into a 450-person organization, now valued at over $4 billion.

Founder Story

Growing up in Encinitas and graduating from University of San Diego, Kudla is an entrepreneur that will inspire the next generation of founders.

Not traditional to most CEOs running household brands. His experience includes working as an accountant, a fashion model, and startup founder.

The origin story: Vuori was a born out of Kudla’s desire for a clothing brand that specialized in everyday apparel, but could also withstand the rigors of activity.

By creating a small collection of samples, Kudla was able to raise $700,000 from non-institutional investors to launch the California-inspired lifestyle brand.

“The biggest element that attracted us to Vuori was Joe’s background. I doubt there’s any leader in the apparel industry who has the combination of skills and experience he has: a CPA, a fashion model, and an entrepreneur. Plus, he’s a very competitive guy. You don’t want to bet against him,” said Jon Kossow, a managing partner at Norwest.

In 2016, Vuori joined REI’s incubation program, which would feature various legacy and emerging brands. Vuori became the number 2 brand across many of REI’s stores and was introduced in 150+ physical locations.

Partnering with Major Retailers

After two years of selling independently, Vuori was able to get national distribution after inking a partnership with retail giants Nordstrom and REI, which allowed its products to be sold in more than 150 physical retail locations.

Other chains took notice as well. By the end of 2017, Vuori was being sold in over 600 retail stores including Segal, Equinox, and Paragon Sports.

After years of steady growth, the company saw its biggest growth in 2021 where it tripled its revenue. It would later raise venture capital from institutional investors Norwest Venture Partners and SoftBank to fuel its next stage of growth.

While this story seems like an overnight success, Kudla recalls the first years excruciatingly difficult.

“If you ask my wife, she’ll remind you of conversations that I had with her, coming home, having a lot of doubt, thinking we were running out of money, not knowing if it was gonna work — the business wasn’t getting the early traction that we had hoped it would,” said Joe Kudla, founder and CEO of Vuori.

Vuori is an activewear brand that can transition seamlessly from the gym, yoga studio, as well as work-from-home apparel.

The Winning Strategy

In the first year, Vuori had to generate awareness primarily through grassroot marketing efforts. Initially selling through yoga studios and gyms.

It wasn’t until Kudla began surveying customers and testing different marketing approaches, which lead him to discover that Vuori’s target customer were less focused on yoga than he thought.

Kudla shifted the strategy to focus more on e-commerce and positioned the brand as a versatile activewear brand.

He also recruited industry veterans to help grow the brand, including Luis Alvarez, who had previously worked for Asics and Nixon Watches and Rebecca Bray who previously worked for surf brand Rip Curl.

In 2018 after leveraging its retail partnerships, Vuori opened two stores in Manhattan Beach and San Francisco in addition to its store in Encinitas. Strategically, they opened them based on where Vuori’s customers most resided.

Building a Sustainable Brand

Today, Vuori spends the majority of its marketing budget on streaming and broadcasting, and TV advertising.

It also invests a healthy amount of its budget in Facebook, Instagram, TikTok and launched several out-of-home billboards.

Focused on keeping customers happy. The brand regularly highlights its robust sustainability practices and promotes a free returns policy to new shoppers.

“The fact that Vuori was able to grow so quickly without raising as much capital as its peers, spending on splashy advertising campaigns or opening many stores ‘says something about the discipline and the focus of the management,” said Steve Dennis, a retail consultant.

Lululemon has outperformed the stock market in the last five years delivering outsized returns for early investors.

Competing with lululemon

Vuori is a promising challenger brand within a $171 billion crowded activewear market, historically dominated by competitors Lululemon, and others.

Lululemon, which makes luxury “yoga inspired” sportswear, is among the most recognizable brand in this space.

While lululemon now makes clothing for men, the brand have historically been treated men as an “after-thought”. Kudla created a brand that first targeted men and expanded to serve women as well.

The goal for Vuori is to build a company that can rival the Lululemons of the world.

“For guys like me, Lululemon always felt like my wife’s brand,” said Kudla in a SDBJ interview.

Vuori seeks to expand its U.S. retail footprint to over 100 stores by the end of 2026.

Expanding Internationally

The athleisure market is set to grow by over $150 billion globally by 2025, validating that a massive opportunity, not only in the U.S., but also internationally.

To take the company to the next stage of growth, Vuori will be expanding its U.S. retail footprint to over 100 stores by the end of 2026.

It also aims to serve more customers internationally as well.

Opening flagship stores in UK, France, Germany, Ireland, the Netherlands, Australia and Canada over the coming years.

Vuori has validated that there’s likely still market space for another major activewear brand as everyday style becomes more and more casual.

The Biggest Takeaway

Vuori has a long way to go to become even as remotely as successful as Lululemon.

Even when compared to smaller apparel and accessories startups of the direct-to-consumer era, like Allbirds and Outdoor Voices, it is still far from a globally recognizable brand.

However, Vuori has validated that there’s likely still market space for another major activewear brand as everyday style becomes more and more casual.

This will be a fascinating company to watch as they continue to expand.

The success of Vuori is based on three factors:

The people (Kudla and his team)
The product (a disciplined focus on quality)
The brand (Southern California lifestyle)

Investment rounds raised so far:

$700,000 from friends and family, and non-institutional investors
$45 million post-money valuation of $200 million led by Norwest Venture Partners in August 2019
$400 million post-money valuation of $4 billion led by SoftBank in October 2021

Founder and CEO Joe Kudla remains majority ownership of Vuori. Other shares are owned by investors as well as early employees.

Given that Vuori has hired industry veterans from competitors such as Lululemon, Athleta, and more, it likely attracted many of them with generous equity packages.