TLDR LULU stock dropped 3.24% to $180.35 following see-through leggings scandal CEO Calvin McDonald stepping down during quality crisis and brand reputation damageTLDR LULU stock dropped 3.24% to $180.35 following see-through leggings scandal CEO Calvin McDonald stepping down during quality crisis and brand reputation damage

Lululemon (LULU) Stock: Defective Leggings and CEO Exit Send Shares Lower

TLDR

  • LULU stock dropped 3.24% to $180.35 following see-through leggings scandal
  • CEO Calvin McDonald stepping down during quality crisis and brand reputation damage
  • Company told customers to wear different underwear to fix $108 defective tights
  • Failed $500 million Mirror acquisition and Disney collaboration hurt brand credibility
  • Shares down 56% over 12 months with 20 Hold ratings versus one Buy rating

Lululemon is in crisis mode. The yoga pants pioneer that built a cult following on quality is now defending defective products and searching for new leadership.

Shares fell to $180.35 yesterday, down 3.24%. The catalyst? A disastrous product launch that’s become a case study in what happens when premium brands cut corners.


LULU Stock Card
Lululemon Athletica Inc., LULU

The $108 “Get Low” leggings became see-through when customers moved or bent. Instead of recalling the product, Lululemon suggested women wear different underwear. Retail analyst Neil Saunders didn’t mince words, calling the response “honestly, that’s a joke.”

His point hits hard. Premium brands charging premium prices shouldn’t ask customers to work around defective products.

Fast Fashion Approach Backfires

CEO Calvin McDonald pushed to speed up product development. The strategy aimed to get new items into stores faster. But rushing appears to have sacrificed the quality control that made Lululemon special.

Chief Brand and Product Activation Officer Nikki Neuburger faced hundreds of employees last week. The global meeting was supposed to showcase new designs. Instead, she explained why the latest tights were exposing customers.

Social worker Amore Prince tested the leggings in-store. Even after staff suggested different sizes, she concluded the product “just doesn’t work.”

McDonald is now departing. Elliott Investment Management wants retail veteran Jane Nielsen to take over. Founder Chip Wilson has nominated three board directors and publicly criticized the company’s direction.

Brand Confusion Grows

The company’s attempts at expansion have misfired repeatedly. The $500 million Mirror fitness device purchase ended in discontinuation three years later. A personal care products line went nowhere.

Recent collaborations flopped too. A Disney partnership got roasted on social media as “random” and “basic AF.” Guggenheim Securities analyst Simeon Siegel said early adopters feel “disenfranchised.”

The brand that created athleisure now chases fast-fashion trends. Retail analysts say Lululemon has gone from industry leader to follower.

Stock Performance and Outlook

LULU shares have crashed 56% over the past year. The stock hit new lows this week as the leggings crisis intensified.

Historical data shows LULU has recovered from previous 30% drops with median 12-month returns of 26%. But those rebounds came when the brand’s reputation was intact.

The company’s revenue growth remains positive at 8.8% over the last twelve months. Operating cash flow margin stands at 16.8%. These metrics show the business still functions. However, brand damage takes time to repair.

Long-time customers who built Lululemon into a powerhouse are questioning their loyalty. The quality issues combined with leadership uncertainty create a challenging environment for any recovery.

The next CEO inherits a company that needs to remember what made it special in the first place.

The post Lululemon (LULU) Stock: Defective Leggings and CEO Exit Send Shares Lower appeared first on Blockonomi.

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