Lululemon Athletica Inc., the popular high-end maker of trendy yoga clothes, took a few knocks this week after it said Monday that it had to recall black pants making up about 17 percent of its women’s bottoms due to subpar product coming out of its Taiwanese supplier, Eclat Textile Co.
The company’s stock, which topped $70 this month, fell as low of $62 on Tuesday. On Wednesday its stock dipped slightly, shedding 20 cents to close at $63.88.
Eclat, which makes stretchy black Luon pants dubbed the “Wunder Under,” delivered a March 1 batch that was too “sheer,” according to the Vancouver-based company. The product was pulled from its shelves two weeks later, causing Lululemon to issue a statement admitting that the recall would have a “significant impact” on its financial results.
Lululemon, which reports fourth-quarter earnings Thursday, said until March 17, same-store sales were up 11 percent and revenue guidance was anticipated to be in the $350 million to $355 million range for the first quarter. Now it expects same-store sales to rise between 5 percent and 7 percent and for sales to be between $333 million and $343 million.
Wall Street was expecting $349.8 million in sales in the first quarter.
Analysts and media outlets pounced on Lululemon’s misstep, wondering if the brand with the cult following of self-professed “Luluheads” would lose dollars to competitors such as Nike Inc., The Gap’s Athleta and Under Armour Inc. or the host of independent niche yoga brands that have flooded the market in recent years.
“It’s too soon to say honestly, but my suspicion is that [the recall] will have very limited impact on the brand,” said William Blair & Co. retail analyst Sharon Zackfia, who said that the recall impacted only 5 or 6 percent of its overall product.
“The amount of customers touched by this [incident] was very small,” the analyst added. “The biggest issue, if there is any issue, is the lack of product. If they don’t see the ‘Wonder Under’ that they love, do they go somewhere else?”
Despite Wall Street “chatter,” Zackfia said “there’s nothing” in Lululemon’s financials that indicates the brand is losing market share.
“Lulu did about $1,000 per square foot in Canada in the fourth quarter alone, which is roughly three times what an average retailer does in the full year,” the analyst offered.
With stellar same-store sales trends that are up 35 percent on a two-year basis, Lululemon has been one of retail’s stronger growth stories during the downturn.
Nonetheless, the first half of 2013 will likely be somewhat of a humbling moment for Lululemon. Analysts said second-half strategies such as merchandising optimization and the integration of iPads in stores for consumers to order out-of-stock product online would help drive growth.
But in regards to Lululemon’s dearth of Wunder Under pants, Wall Street and Luluheads alike will have to wait for chief executive officer Christine Day to address that issue today — and expect the stock to react accordingly.
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews
@prada is introducing a new project at its men’s fall 2018 show this Sunday: “Prada Invites.” The fashion house invited four celebrated creative minds – @ronanaerwanbouroullec, Konstantin Grcic, @herzogdemeuron and @rem.koolhaas – to each create a unique item with its iconic nylon material. The designs will be unveiled on the runway show, which will take place at the company’s warehouse in Viale Ortles 25. #wwdfashion #mfwm (📷: @martinocarrera)
@kering_official is spinning off its stake in puma in an effort to focus on its luxury brands, the brand operator announced yesterday. “We are proud to have supported the turnaround of Puma, which now has unrivaled capabilities to take full advantage of the specific dynamics of its global markets and is poised to achieve substantial growth,” said François-Henri Pinault, Kering’s chief executive officer and chairman. Artémis will become a “long-term strategic shareholder” of Puma with a 29 percent stake. #wwdnews #wwdfashion (📷: @jilliansollazzo)
The fashion world mourns for celebrated street style photographer, Nabile Quenum, who died at age 32 in Paris.
Quenum, creator of the fashion blog “J’ai Perdu Ma Veste,” was a fashion week fixture, and regularly shot for New York magazine’s The Cut, among other outlets, and brands such as Louis Vuitton, Moncler and Adidas. He was also actively involved in the #NoFreePhotos initiative, which kicked off in the fall. Read more about Quenum in @kbsmoke's story on WWD.com. #wwdnews
@verwanggang and @maisonladuree have teamed up on a dessert collab called Vera Wang Pour Ladurée. The collection, which launched this week, features a specialty macaroon, as well as a wedding cake inspired by one of the designer’s gowns. “I could not imagine a more delicate or sophisticated creation to grace any couple’s celebration,” said Wang. #wwdfashion