Lululemon Encounters Problem with Sheerness of Pants
For fitness fanatics, Lululemon is the fastest growing brand. Signs of this can be seen all over: in the neon-striped hoodie or in the reusable red shopping bag with the company manifesto. Customers explain, “Once you go Lululemon, you never go back.”Another says, “It is the reason I started exercising again.” Even considering the economic crisis that impacted the U.S. so deeply, Lululemon barely skipped a beat.
This past week, Lululemon encountered a problem that they have not yet faced: a batch of one of their styles of their pants called the“Luon”appeared to be too sheer for customers. There have not been any changes in manufacturers or quality of ingredients, so the company is looking closely to see what happened when these pants were made. The stock dropped almost 5% when the news hit on Tuesday.
“Longer term we have to ask the question whether or not they’re diluting their relationship with their core customers,” said Christian Buss, an analyst who follows Lululemon for Credit-Suisse.
This problem is pretty unusual for a company that has been as successful as Lululemon. They have 211 stores, and have been ranked number 3 on research and consulting firm Retail Sails’ list of most productive chain stores in 2012, directly behind Apple and Tiffany. Their stores sell about $2,000 per square foot, and bring in an average of $5.5 million annually. The added part of Lululemon, though, is that they are not just selling a brand, but rather a way of life. Whereas the model for retail used to be “come here and be cool if you buy our product,” explains Buss, now the model for Lululemon is, “You’re pretty cool, we’ll be your partner in being your best possible self.
They are offering full refunds or exchanges to their customers who have this problem.