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Lululemon Athletica Inc. Message Board

  • rudeawake1965 rudeawake1965 Jun 26, 2013 4:17 AM Flag

    Lulu management and Board

    I am hopeful that the full story of the CEO “resignation” will come out eventually, although I doubt it.
    It is no secret, except to Wall Street, that the company has seen decreasing sales growth, margins and quality in recent months. In March, the company announced a “recall” due to opaqueness in certain pants. Interestingly, the Taiwanese supplier (Eclat) immediately and vehemently denied any quality issues in the product. After the initial denial, the supplier was not heard from again. In the recent earnings release of Eclat, they did not mention any recall and in fact had a stellar quarter. Apparently Eclat was either coerced or bribed by lulu to not address the situation again after their initial denial was so widely covered.

    The company garnered some accolades for the way it handled the “recall”, even though there were numerous reports of Lulu staff requiring those returning product to put on the pants and bend over so the quality could be checked.

    It seems obvious that this “recall” was invented to mask declining margins and sales growth. Apparently the Board did not appreciate this subterfuge.

    A review of blogs devoted to Lulu reveals increasing dissatisfaction with the quality and value of Lulu products. Also, the recent “help wanted” posting for the open CEO position was comical. I am sure the company thought that it would appear hip and fashionable with this ploy, but instead came across as amateurish and buffoonish.

    With more forthright disclosure under a new, less deceitful CEO, I expect increasingly worse news from Lulu , and a resultant sharp decline in stock price. (and hopefully some shareholder lawsuits aimed at a slow to react Board as well)

    Sentiment: Strong Sell

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