Lululemon Athletica

Lululemon Athletica Incorporation
Public
Traded as NASDAQ: LULU
Industry Retail
Founded 1998
Founder Chip Wilson
Headquarters Vancouver, British Columbia, Canada
Number of locations
 354 (October 2015) [1]
Area served
 North America, Asia, Oceania
Key people
 Laurent Potdevin (CEO)
Products Athletic Apparel and Accessories
Revenue Increase US$1.37 Billion (FY 2013)[2]<
Increase US$376.4 Million (FY 2013)[2]
Increase US$271.4 Million (FY 2013)[2]
Total assets Increase US$734.6 Million (FY 2012)[3]
Total equity Increase US$606.1 Million (FY 2012)[3]
Number of employees
 2,861
Divisions Lululemon Athletica
OQOQO
Ivivva Athletica
Slogan Creating components for people to live longer, healthier, more fun lives
Website www. lululemon.com

Lululemon Athletica Inc. (/ˌluwluwˈlɛmᵻn/), styled as lululemon athletica, is a Canadian athletic apparel retailer. It is a self-described yoga-inspired athletic apparel company and a designer and retailer of technical athletic apparel, which produces a clothing line and runs international clothing stores from its company base in Vancouver, British Columbia, Canada. The company makes a number of different types of athletic wear, including performance shirts, shorts, and pants, as well as lifestyle apparel and yoga accessories. The firm has been a magnet for numerous controversies including product recalls,[4] product quality issues, overpriced merchandise,[5] making misleading statements to artificially inflate its stock price,[4] marketing efforts that exclude overweight customers,[5] accusations by shareholders of fraud,[6] false advertising and controversial statements by a founder. They sell their clothing internationally. Key competitors include Athleta, Nike and Under Armour.

History and management

The Lululemon Athletica store in Westport, Connecticut
Lululemon Athletica in Promenade

The company was founded in 1998 by Chip Wilson in Vancouver, Canada.[7] In 2001, the company began selling yoga wear.[8] Christine Day, a former co-president of Starbucks International, became chief executive officer in June 2008; in 2013, it was announced Day would leave her position,[9] and she was replaced by Laurent Potdevin in January 2014.[10] In December 2010, Lululemon recalled some of the store's reusable bags that were made in China from polypropylene, based on reports of high levels of lead and concerns about possible lead poisoning.[11] In December 2013, founder Chip Wilson announced his resignation as chairman, and that president of TOMS Shoes, Laurent Potdevin, would become CEO.[12] In February 2014, the firm announced plans to open its first full store in Europe with a flagship shop in Covent Garden, London.[13] Day announced her departure as CEO in June 2013 after one of the company's core products, black Luon yoga pants, were pulled due to the sheerness and lack of quality of the pants.[14] In February 2015, Wilson announced that he resigned from the board.[15][16][17] Michael Casey, lead director of the board, replaced Wilson.[18] Store managers have responsibility for the store's layout, color coordination, and community involvement.;[19] Seventy percent of managers are hired internally, according to a company source.[19]

Lululemon murder

Further information: Lululemon murder

In 2011, employee Brittany Norwood murdered colleague Jayna Murray at the Lululemon Athletica store in Bethesda, Maryland.[20] The case received intense media attention and became known as the "Lululemon murder".[20][21][22]

Controversies

False advertising

In November 2007, The New York Times reported that Lululemon made false claims about its Vitasea clothing product; the firm had claimed that its Vitasea clothing, made from seaweed, provided "anti-inflammatory, antibacterial, hydrating and detoxifying benefits" but laboratory tests failed to find significant differences in mineral levels between cotton T-shirts and the fabric Vitasea.[23] Lululemon was subsequently forced to remove all health claims from its seaweed-based products marketed in Canada, following a demand from a Canadian oversight agency, the Competition Bureau of Canada.[24] A subsequent report in 2009 suggested that some yoga devotees saw the firm's yoga image as an "annoying phony-baloney symbol" with criticism that its "positive messaging" is vague with slogans such as "friends are more important than money."[7]

Product quality issues

There were complaints about shoddily made clothing which was "too sheer" as well as having holes appear and coming apart after a few uses.[25][26] In March 2013, Lululemon was hit by a large recall of its black yoga pants that were unintentionally transparent and "too thin";[27][28] the recall, which amounted to approximately 17% of all women's pants sold in its stores, impacted its financial results.[29] Lululemon's Chief Product Officer, Sheree Waterson, resigned following the fallout from the recall.[30] The financial hit on earnings, and damage to the public image of the Lululemon brand are credited with the executive's forced departure.[31]

Controversial statements by founder

Founder Chip Wilson has made numerous controversial statements. He said his company does not make clothes for plus-size women because it costs too much money.[32] He blamed some customers for wearing Lululemon's clothes improperly or for having body shapes inconsistent with his clothes, in such a fashion as to cause small balls of twisted fabric to accumulate on the clothes, known as excessive pilling.[33] During his interview for Bloomberg TV in November 2013, he said, "Frankly some women's bodies just don't actually work for it" and "it's really about the rubbing through the thighs, how much pressure is there over a period of time, how much they use it."[33] According to one report, comments such as these led to Wilson's resignation as chairman.[34] The statements were described in Time as "fat shaming" which led to much criticism among feminist blogs. The report suggested that it was company policy to discourage "plus-size customers" as part of its brand strategy since "no customer wants to endure the embarrassment of asking a clerk to go find a bigger size."[35]

Legal disputes

In August 2012, Lululemon filed suit against Calvin Klein and supplier G-III Apparel Group for infringement of three Lululemon design patents for yoga pants.[36] The lawsuit was somewhat unusual as it involved a designer seeking to assert Intellectual Property protection in clothing through patent rights. On November 20, 2012, Lululemon filed a notice of voluntary dismissal in the Delaware courts based upon a private settlement agreement reached between the parties that dismissed the suit.[37]

References

  1. ↑ "lululemon athletica inc. announces third quarter fiscal 2015 results". lululemon athletica. lululemon. Retrieved 4 January 2016.
  2. 1 2 3 "Lululemon Athletica Inc. Annual Report Form 10-K". Lululemon Athletica. 2013-03-21. Retrieved 2014-08-27.
  3. 1 2 Lululemon (LULU) annual SEC balance sheet filing via Wikinvest
  4. 1 2 CANADIAN PRESS APRIL 4, 2014, Canadian Press, Lululemon poised to defeat lawsuit over recall of sheer black Luon pants as draft decision dismisses cases, Retrieved May 11, 2015, "...lawsuit by shareholders ... failing to disclose the quality defects in its Luon yoga pants, ... making misleading statements and omissions that caused its stock price to become artificially inflated...."
  5. 1 2 9 November 2013, Jessica Wakeman, The Guardian, You can keep your overpriced, overhyped Lululemon yoga pants: The founder of Lululemon actually blamed fat women for ruining his yoga pants by rubbing their thighs together too much, Retrieved May 11, 2015, "...Let me translate from biz-speak: if your thighs rub together – meaning if they touch – you might be too plump for Lululemon pants. ..."
  6. ↑ July 3, 2013, The Age (Australian newspaper) Downward, dogged: Lululemon sued for fraud, Retrieved May 11, 2015, "... Lululemon has been hit with a lawsuit accusing it of defrauding shareholders by hiding defects in yoga pants whose sheerness led to a costly recall, and concealing talks that led to the sudden departure of its chief executive...."
  7. 1 2 Rob Walker, July 21, 2009, New York Times, Marketing Pose, Retrieved , "...it’s no surprise that some yoga devotees have zeroed in on it as an annoying phony-baloney symbol. Elaine Lipson, a writer and editor in Boulder, Colo., who ..."
  8. ↑ "Yen for zen; Yoga is to today what aerobics were to the eighties.; But the new gear is a far cry from yesterday's; Jane Fonda sweats.". The Globe and Mail (Toronto). 2011-11-29.
  9. ↑ "Lululemon CEO Steps Down". The Daily Beast. Retrieved 11 June 2013.
  10. ↑ "lululemon athletica appoints Laurent Potdevin as chief executive officer". MarketWatch. Retrieved 10 December 2013.
  11. ↑ Sinnema, Jodie (21 December 2010). "Lululemon issues recall for shopping bags due to lead risk". Edmonton Journal. Retrieved 6 May 2015. People who purchase yoga pants, hoodies or headbands from the more than 100 Lululemon stores in Canada, the U.S. and Australia often save such bags to carry their lunches to work
  12. ↑ Ogul, David. "Chip Wilson: Lululemon Chairman Resigns; TOMS CEO Taking the Helm". Newsmax. Retrieved 10 December 2013.
  13. ↑ Suzanne Bearne, Drapers. “Lululemon limbers up to open first UK store in Covent Garden.” February 20, 2014. February 4, 2015.
  14. ↑ Fred Meier, USA TODAY 7:25 p.m. EDT June 10, 2013 (2013-06-10). "Stunner: Lululemon CEO Christine Day leaving". Usatoday.com. Retrieved 2014-04-13.
  15. ↑ "Power shifts at Lululemon as Chip Wilson seals deal". Globe and Mail. 11 June 2014.
  16. ↑ Michael Calia, February 2, 2015, Wall Street Journal, Lululemon Founder Wilson Quits Board: Resignation Comes About Six Months After Disagreement Was Settled on Yoga-Apparel Maker’s Strategy, Accessed May 6, 2015
  17. ↑ http://www.businessinsider.com/lululemon-founder-chip-wilson-resigns-2015-2
  18. ↑ Huffington Post, Chip Wilson Leaving Lululemon
  19. 1 2 "Lululemon CEO: How to build trust inside your company". CNN Money. Retrieved 2012-10-18.
  20. 1 2 Morse, Dan (March 12, 2012). "Lululemon marks anniversary of Jayna Murray's death". The Washington Post. Archived from the original on November 3, 2012. Retrieved November 3, 2012.
  21. ↑ Noble, Andrea (2011-10-24). "Selection of jury starts in Rockville". The Washington Times. Retrieved 2012-09-19.
  22. ↑ Morse, Dan (2011-10-23). "Lululemon killing trial begins Monday". The Washington Post. Retrieved 2012-09-19.
  23. ↑ Story, Louise (2007-11-14). "Seaweed Clothing Has None, Tests Show". New York Times. Retrieved 2007-11-14. Lululemon ... says the VitaSea clothing, made from seaweed fiber ... provides anti-inflammatory, antibacterial, hydrating and detoxifying benefits ... There is one problem with its VitaSea claims, however. Some of them may not be true.
  24. ↑ "Lululemon VitaSea Clothing: Competition Bureau Takes Action to Ensure Unsubstantiated Claims Removed from Lululemon Clothing". Government of Canada. Retrieved 2007-11-16.
  25. ↑ Los Angeles Times, It seems that Lululemon, the Vancouver-based company, had to recall some of its yoga pants because they are too sheer. This is not, it turns out, a minor problem., Retrieved , "....adorably named Lululemon that has a problem with see-through yoga pants. Many brands, when stretched just so, are sheer...."
  26. ↑ Michelle Chapman, AP Business Writer, November 1, 2013, USA Today, New quality complaints about Lululemon pants: Just a few months after company pulled yoga wear from shelves, new quality issues arise., Retrieved May 6, 2015, "...New yoga pants ... recent complaints ... still too sheer... pants pilling after a few months of wear — or even just a few uses — and about holes and seams coming apart..."
  27. ↑ 13 February 2015, BBC, 'Yoga pants': Are leggings and other tight trousers indecent? Are yoga pants a threat to public decency? It might seem so after the beloved athletic wear once again made headlines - this time after a lawmaker debating public decency said the pants "should be illegal"., Retrieved May 11, 2015, "...2013 when Lululemon, a large clothes retailer, had to recall many of its leggings ... sheerness ..."
  28. ↑ June 10, 2013, Tiffany Hsu, Los Angeles Times, Lululemon CEO Christine Day to step down after sheer-pants scandal, Retrieved May 6, 2015, "...The so-called Pantsgate scandal, in which Lululemon pulled all of its black yoga bottoms in March after deeming the luon fabric to be too thin,..."
  29. ↑ Isidore, Chris (March 19, 2013). "See-through pants problem causes Lululemon recall". CNN Money. Retrieved April 7, 2013.
  30. ↑ Kavilanz, Parija (2013-04-04). "Lululemon exec out after yoga pants fiasco". CNN Money. Retrieved April 4, 2013.
  31. ↑ "Lessons Learned from the Lululemon Recall". The National Law Review. Risk and Insurance Management Society, Inc. (RIMS). Retrieved April 10, 2013.
  32. ↑ Bhasin, Kim (2013-07-31). "Shunning Plus-Size Shoppers Is Key To Lululemon's Strategy, Insiders Say". The Huffington Post. Retrieved 2014-04-13.
  33. 1 2 "Outrageous Remarks By Lululemon Founder Chip Wilson". Business Insider. 2013-12-10. Retrieved 2014-04-13.
  34. ↑ Eun Kyung Kim (2013-12-10). "Lululemon co-founder steps down in wake of 'women's bodies' remark". TODAY.com. Retrieved 2014-04-13.
  35. ↑ Eliana Dockterman, November 13, 2013, Time magazine, "What Lululemon Could Learn From Abercrombie About Fat Shaming: A co-founder of Lululemon said his yoga pants just aren’t built for 'some women's bodies.' That's just a bad business decision", Retrieved May 6, 2015, "Clearly the feminist arguments against fat shaming are falling on deaf ears at Lululemon ... torrent of criticism hasn't inspired Wilson to change his tune."
  36. ↑ Weller, Susan Neuberger; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (September 21, 2012). "S. 3523: Louboutin, Lululemon, and Fashion Design: Finally Getting Some Respect?". The National Law Review. Retrieved January 15, 2013. Cite uses deprecated parameter |coauthors= (help)
  37. ↑ Weller, Susan Neuberger; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (November 27, 2012). "Lululemon and Calvin Klein Settle Yoga Pants Design Litigation". The National Law Review. Retrieved January 14, 2013.

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