The once pristine reputation of high-end exercise gear retailer Lululemon (LULU) has taken a beating this year. Last March the company was forced to recall a massive amount of its yoga leggings because they were see-through. It's cheeks red over the incident, Lululemon took a huge write down and accepted the resignation of longtime CEO Christine Day.
With the company continuing to search for a replacement, co-founder Chip Wilson has been doing damage control in response to customer complaints over pilling and premature wear on pants. Suffice it to say it's not going well. Speaking with Bloomberg's Trish Regan on Wednesday Wilson said customers only have themselves to blame. "Some women's bodies just don't work for (our pants)" explained Wilson. It seems heavy-set folks' parts rub together in unusual ways, causing pants to wear more quickly.
Belus Capital Advisors' Brian Sozzi says people need to consider the source. "The set-up on Chip Wilson is that he's a notoriously strange dude so I'm not surprised that he said that," says Sozzi in the attached clip. Lululemon sells very expensive product. Customers are to be pampered, not ridiculed. Not unlike Mike Jeffries at Abercrombie & Fitch (ANF), Wilson may have lost touch with the customer base.
Sozzi says there are three ways Lululemon could get a turnaround going:
1. Keep Wilson off television. Just keep him out of the media entirely. He founded a great company but Wilson isn't the day to day operations guy Lululemon needs.
2. Add new sizes. Lululemon seems committed to the idea of exclusive product offerings. Suggesting most people are too fat for your product is a move in the wrong direction.
3. Fill the CEO vacancy with a strong voice. Five months is too long for Lululemon to go without a CEO. It's time for the company to pay up for someone good. Needless to say Sozzi suggests the new boss should address the Wilson problem immediately. "Put the guy to bed, put him in the corner, keep him quiet."
Lululemon makes some of the highest quality athletic and casual wear extant but customers aren't going to endure insults for the right to spend $120 for exercise pants. It's time to give Wilson a lifetime achievement award and focus on expanding offerings beyond the yoga crowd that make up Lululemon's base.
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