Lululemon Shares Nosedive 17%

CNNMoney.com

March 30, 2017

Brand struggles after quality complaints

Things have looked brighter for Lululemon and its brand of luxury athletic wear.

Lululemon shares fell 17% in after-hours trading Wednesday after the company predicted its sales would drop this quarter. The culprit, according to CEO Laurent Potdevin: Its clothes don't pop online.

"We have clearly identified the issues: An assortment lacking depth in color for spring, compounded with visual merchandising that did not powerfully translate our design vision," Laurent said on a conference call for investors.

To stave off the problem, Lululemon will launch more colorful clothes on its website as soon as next week, Potdevin said.

The company's problems aren't all internal, though. Lululemon faces intense competition from companies like Nike, which is more than 10 times its size.

The athleisure brand had a solid 2016, with same-store sales up 4% in the past fiscal year. But the company said its current quarter sales would sink by a few percentage points at the stores that were open this time last year. A bad upcoming quarter would give its competitors room to grow.

Lululemon has been hurt by problems with its own merchandise before. In 2013, a recall of black pants that were too sheer -- i.e. see-through -- hit sales and profits. CEO Christine Day had to step down as a result of the debacle. And in 2015, Lululemon had to recall some women's tops because hard-tipped drawstrings were injuring wearers.

Copyright 2017 Cable News Network. All Rights Reserved.

Copyright © LexisNexis, a division of Reed Elsevier Inc. All rights reserved.  
Terms and Conditions    Privacy Policy

Quality News Today is an ASQ member benefit offering quality related news
from around the world every business day.