TLDR
- Lululemon stock fell 3.24% to $180.35 as defective “Get Low” leggings expose quality control failures
- CEO Calvin McDonald is stepping down, leaving company with interim leadership during crisis period
- Company advised customers to change underwear to fix see-through $108 leggings, drawing analyst criticism
- Failed ventures include $500 million Mirror fitness device and poorly received Disney collaboration
- Stock has dropped 56% over past year, with analysts setting average price target of $211.71
Lululemon faces a perfect storm of problems. The athleisure giant is dealing with product failures, leadership changes, and a bruised reputation.
The company’s stock closed at $180.35 yesterday. That’s down 3.24% in a single day. The drop came as criticism mounted over defective leggings that became see-through when customers bent or moved.
Lululemon Athletica Inc., LULU
The $108 “Get Low” tights have become a symbol of what many say is wrong at Lululemon right now. During a global employee meeting last week, Chief Brand and Product Activation Officer Nikki Neuburger had to address the embarrassing failure instead of celebrating new designs.
The company’s solution? Tell women to wear different underwear. Retail analyst Neil Saunders called this response “honestly, that’s a joke.”
Saunders pointed out that premium brands shouldn’t need to give customers instructions on how to compensate for defective products. The leggings simply don’t work as designed.
Speed Over Quality
Under CEO Calvin McDonald’s leadership, Lululemon worked to speed up its product development process. The goal was getting items to stores faster. But that approach appears to have backfired.
The rush to market has created what insiders call “self-inflicted wounds.” Quality testing seems to have taken a back seat to speed.
McDonald is now stepping down. The company operates under interim leadership while searching for a new chief executive. Elliott Investment Management is pushing for retail veteran Jane Nielsen to take over.
Founder Chip Wilson has ramped up his public criticism. He nominated three directors to the board. Wilson believes the company has abandoned its core fitness customers.
Customer Loyalty Cracking
Long-time customers are noticing the changes. Social worker Amore Prince tried the problematic leggings in-store but found they didn’t work. Store staff suggested she try different sizes. Prince concluded “this is just one of those items that just doesn’t work.”
The quality issues extend beyond one product line. Customers who once swore by Lululemon’s durability are questioning their loyalty.
The company has also confused its customer base with random product expansions. It spent $500 million buying Mirror, a fitness device. Three years later, Mirror was discontinued.
A personal care products line failed to gain traction. A recent Disney collaboration got trashed on social media. Users called it “random” and “basic AF.”
Simeon Siegel of Guggenheim Securities said early adopters likely feel “disenfranchised.” The company has moved away from the high-quality basics that built its reputation.
Retail analysts warn that Lululemon has shifted from industry leader to “a bit of a follower” of fast-fashion trends. The company that created the athleisure market now struggles to maintain its premium position.
The stock has fallen 56% over the past year. Analysts give it a Hold rating with an average price target of $211.71. That suggests 17.4% upside from current levels. Twenty analysts rate it a Hold, with only one Buy rating.
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