Lululemon yoga pants: No more sheer terror?
The chastened apparel maker is trying to put a humorous spin on the story, but it has an awful lot at stake in getting this right.
The Canadian company says it has fixed the manufacturing problem in those pants that made them too sheer and forced Lululemon to pull them from the market earlier this year. Though Lululemon is using humor to address an embarrassing situation, it isn't a laughing matter.
The affected pants accounted for about 17% of its total sales before the recall. The chief products officer resigned as a result of the fiasco, and the company slashed its earnings outlook. Lululemon lost between $57 million to $67 million in sales because of the recall.
According to the company blog, Lululemon has teamed up with "university scientists" to develop a "sheer-o-meter" that measures the amount of light that shines through the fabric while being stretched at varying degrees. The company also bragged that the pants go through 15 tests to ensure that consumers get "great coverage" on their backsides. Shoppers can consult with an "educator" at its stores to make sure the pants fit correctly.
Lululemon's clothing isn't cheap. The yoga pants retail for about $98, while the tank tops fetch about $64 because of what Bloomberg News describes at its "carefully cultivated reputation for quality."
Rivals such as Nike (NKE) and Under Armour (UA) may be able to capitalize on Lululemon's stumble. The see-through pants were the latest quality control problem to have dogged Lululemon, which was also plagued by the bleeding of bright colors. Moreover, Lululemon's fabric supplier in Taiwan denied that it was at fault for the sheerness problem.
Yoga is a big business. According to the 2012 "Yoga in America" study, the U.S. has 20.4 million practitioners who spend $10.3 billion on everything from yoga classes to products and equipment. That's an increase from a 2008 estimate of $5.7 billion.
Shares of Lululemon, which reports quarterly earnings on June 10, were higher in Tuesday morning trading. Ironically, the negative publicity surrounding "sheer-gate" caused more people to go its stores to see the "situation" for themselves, according to Bloomberg.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
Almost forgot. Keep Californication out West, please.
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[BRIEFING.COM] The stock market finished an upbeat week on a mixed note. The S&P 500 added just over a point, holding its weekly gain at 1.0% while the Nasdaq lost 0.4%.
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