U.S. Markets closed

Analyst: Lululemon founder has not hurt brand

The Associated Press

Cowen and Co. analyst Faye Landes says that despite investor concern, recent controversial comments by Lululemon's founder have not hurt the company's brand.

THE OPINION: The analyst said in a research note Tuesday that a Cowen survey of consumers found that people were largely positive on the brand and did not appear to be distracted by recent comments by Chip Wilson, company founder and chairman, suggesting customer bodies were the cause of recent quality issues.

Lululemon pulled some of its popular yoga pants from its shelves this spring because they were too sheer, which they blamed on a style change and production issues. But complaints about the quality persisted into the fall, including gripes about wear and tear.

Wilson said on a television interview earlier this month that some women's bodies "just don't actually work" for Lululemon pants and that thigh rubbing over time will cause pilling and poor performance of its pants that some customers had cited. A subsequent apology online was widely criticized as well.

Investors were concerned that Wilson alienated many consumers. But Landes found that consumers predominantly have a very positive perception of the brand. Only 8 percent of the responses in their survey were negative, and only a few appeared to be related to Wilson's comments.

The analyst reiterated an "Outperform" rating on the Canadian company's stock.

THE STOCK: Shares of Lululemon Athletica Inc. fell 21 cents to $71.19 in afternoon trading, in line with broader market trends. The company's stock price is down nearly 7 percent for the year.