Lululemon's see-through yoga pants get yanked
A manufacturing defect results in an unacceptable 'level of sheerness' -- and a recall that will create shortages of the popular women's apparel.
This is a big deal, affecting 17% of all the women's pants sold in Lululemon's stores, and it will have a "significant impact" on financial results, which are set to be released Thursday. Lululemon says it will release more details about the recall at that time.
Not surprisingly, Lululemon slashed its earnings outlook. The company now expects comparable-store sales, a key retail metric measuring performance at stores open at least a year, to gain 5% to 8% in the first quarter, down from an earlier forecast of 11% on a constant-currency basis. Revenue is expected to be $333 million to $343 million, versus an earlier estimate of $350 million to $355 million. Wall Street analysts had forecast sales of $353.66 million.
This represents a rare misstep for Lululemon, whose shares have surged more than 380% over the past five years, fueled by the surging popularity of yoga. Wall Street thinks the stock hasn't found its happy place yet. The average 52-week price target on it is $79.29, more than 20% higher than where it currently trades.
Lululemon CEO Christine Day issued a profuse apology for the mishap, saying in a press release: "We will accept nothing less than the very highest quality we are known for." Among the companies likely to exploit the situation are competitors like Nike (NKE) and Under Armour (UA).
Lululemon isn't sure how the problem occurred because it has used the same manufacturer for its signature fabric since 2004. Customers who purchased black Luon pants after March 1 are welcome to return them for a full refund or exchange. But those looking for Lululemon's popular apparel now may find the pants in short supply, the company says.
Whether this snafu will hurt Lululemon's brand over the long run remains to be seen, but the company is clearly convinced that seeing too much of the customers wearing the defective pants is worse.
Jonathan Berr isn't sure whether his chakras are in alignment, but he doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.
The "sheer" audacity of all this leads me to conclude that it is nothing more than a rather "transparent", "thinly veiled" publicity stunt intended to get them some free national "exposure". I feel confident that most everyone will be able to "see right through it all"! In the meantime, in an effort to get with the times, I am going to run out the store, TODAY! ...and pick up some right, proper pants to wear so that I will be smartly attired the next time I eat a yoga...red ones for strawberry, blue for blueberry, and boy for boysenberry! ...Ta-ta!
I'm going to do a little investigating. I'm going to hit the gyms. I'll be getting behind the situation and be offering my support. I'll bend over backwards to get the job done. I'll be looking very closely at the evidence. I'm on the scene. 10-4.
They missed a perfect opportunity to sell them through Frederick's of Hollywood, Hustler, etc.
Just do the "superman trick" and wear some undies on the outside of the pants. Who knows?!?... maybe that will start a new trend!
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