Lululemon Stock Rises After Leggings Return with Warning

Lululemon Relists Leggings with New Guidance, Stock Recovers

Lululemon Athletica Inc. has resumed online sales of its controversial "Get Low" leggings in North America, now accompanied by explicit disclaimers for consumers. The company's stock experienced a subsequent recovery, rising as much as 3.5% on Thursday.

Situation Overview

The athletic apparel retailer temporarily suspended sales of the leggings last week following customer complaints about the fabric's sheerness, deeming it not "squat-proof." The product pages in North America now feature guidance advising shoppers to size up and to wear skin-tone, seamless underwear. These disclaimers were not added to European online stores, as the product was not pulled from those markets.

Impact on the Market

The swift action and transparent guidance appeared to reassure investors, helping Lululemon's shares partially recover from losses incurred earlier in the week when news of the sales halt broke. This event follows previous product-related issues for the company, including a 2013 recall of black yoga pants for similar transparency concerns and the discontinuation of its Breezethrough line approximately 18 months ago due to customer feedback on the fit.

Summary and Outlook

Lululemon's proactive approach in addressing the product issue has mitigated immediate negative market sentiment. The focus now shifts to consumer reception of the updated product and guidance. Future performance will depend on the brand's ability to maintain customer trust and uphold its reputation for quality, a key factor investors will continue to monitor closely.

FAQ

Q: Why did Lululemon add new warnings to its "Get Low" leggings?
A: The company added warnings after receiving customer complaints that the fabric was too sheer and not "squat-proof," advising customers on sizing and appropriate underwear.

Q: How did Lululemon's stock react to the leggings' return?
A: Lululemon shares rose by as much as 3.5%, partially recovering from losses experienced when the company first suspended sales of the item.

Q: Is this the first time Lululemon has faced issues with product quality?
A: No, the company has faced similar issues before, most notably a major recall of its black yoga pants in 2013 due to transparency problems.

Source: Investing.com