Tags: lululemon | shares | sink | 7 | percent

Lululemon Shares Sink More Than 7 Percent on Failure To Rebound

Image: Lululemon Shares Sink More Than 7 Percent on Failure To Rebound

By Nick Sanchez   |   Tuesday, 22 Apr 2014 07:06 AM

Lululemon shares tumbled more than 7 percent on Monday, as the upscale Canadian yogawear retailer failed to convince analysts that it can overcome the mistakes of last year.

"We came away from these meetings with the distinct impression of a company losing focus," said Credit Suisse's Christian Buss after attending the analyst presentation last week, Reuters reported. ". . . this seems inappropriate for a brand that has faced significant product flow, quality, and brand communication challenges."

Urgent: Do You Approve Or Disapprove of President Obama's Job Performance? Vote Now in Urgent Poll

Last year Lululemon was forced to recall some of their yoga pants after discovering that they were so sheer that they were see-through. It later ran into public relations problems when Chairman Chip Wilson got defensive about the pants, blaming customers and appearing to imply that plus-size women shouldn't patron the brand.

"Quite frankly, some women’s bodies just actually don’t work for [the pants]," Wilson said last year. "It’s about the rubbing through the thighs" and "how much pressure is there."

In 2014, Lululemon has its eye on expansion, opening its first European location in London, expanding apparel lines, and moving more heavily into menswear, which it said could eventually garner $1 billion.

Many analysts remained skeptical, however.

"We, and we think many investors, would have liked to hear much more concrete details regarding the company's business analysis and plans," said Faye Landes, an analyst with Cowen and Co. She said there was no "compelling reason to jump into Lulu right now."

New CEO Laurent Potdevin was criticized for being too vague with his financial projections and spoke at length about building an "authentic" brand and voice, but didn't illuminate what authentic meant. The New York Post reported that some shareholders also found Potdevin "kind of . . . dumpy" as he presented in an untucked shirt and somewhat baggy clothes.

"If he’s a competent leader, he’s a competent leader. But you’ve got to ask whether this guy is really in touch with the mind-set of his core customer in the athletic space," one investor told the Post.

Canaccord Genuity analyst Camilo Lyon offered some hope for the brand, but said it won't be until next year that the brand will start to boom.

"Given the new members of management coupled with the turbulence the business has withstood in the past year, longer term targets are more likely to come after a solid base of infrastructure is in place, likely in 2015 at the earliest," Lyon said. 

Urgent: Assess Your Heart Attack Risk in Minutes. Click Here.

Related Stories:

© 2015 Newsmax. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved