Lululemon’s Shareholders Shrug Off Labeling Report
Lululemon Athletica Inc.'s stock price fell by as much as 9 percent before recovering Wednesday in the aftermath of a New York Times report that the yogawear firm's VitaSea line does not appear to contain the seaweed benefits its educational tags and...
Lululemon Athletica Inc.'s stock price fell by as much as 9 percent before recovering Wednesday in the aftermath of a New York Times report that the yogawear firm's VitaSea line does not appear to contain the seaweed benefits its educational tags and content label claim.
Shares fell $3.75, or 9 percent, to $39.75 in early Nasdaq trading, but closed up 79 cents, or almost 2 percent, at $44.29.
The newspaper said it received a tip from a Lululemon investor, who was shorting its stock, that a lab test showed there was little difference in the mineral levels of a shirt from Lululemon's VitaSea line, which purports to be made of 24 percent Seacell seaweed along with cotton and Lycra spandex, and cotton T-shirts. The Times commissioned a separate lab test to compare the contents of a cotton J. Crew T-shirt with a VitaSea-line shirt. The test confirmed no significant difference in mineral levels, though it could not rule out the presence of seaweed entirely.
In a statement issued Wednesday after the markets closed, the company said: "Lululemon is a company of integrity that strives to maintain a culture of transparency and openness. We stand behind our products. All of our products go through rigorous testing, including our VitaSea fabric, and that process has been in place for a year. We are taking this situation seriously and will provide full information to further clarify this matter as soon as we receive it."
Lululemon has built its reputation around health, wellness, a positive attitude and the idea of social responsibility. Although it does not advertise those mantras in traditional ways, its reusable bags and in-store information communicate those messages to its yoga-practicing consumers.
According to the tags on Lululemon's VitaSea garments, the seaweed fiber releases amino acids, minerals and vitamins into the skin upon contact with moisture. Seacell, owned by German-based Smartfiber, is said to have provided the seaweed fiber to Lululemon, but Lululemon had not independently tested VitaSea, the Times said.
The Vancouver-based company, which did an estimated $150 million in sales last year and has about 60 retail stores, issued an initial public offering in July, raising $327.6 million with 18.2 million shares of common stock priced at $18 each. Since then, shares have traded between $24.92 and $60.70 — its high in late October.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)