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2 Reasons Investors Should Stand Behind Lululemon outlet
Last quarter, discount Lululemon announced its much publicizedrecall of black Luon pants because new shipments didn't meet the company's standards for 'sheerness'. The mishap could cost the company as much as $67 million and theresult was a punfilled bonanza for the media.
"Lululemon discount stock drops as yoga pants expose problems" Reuters"cheap Lululemon would sell, say cheeky observers" CBCLaughs and giggles aside, investors should note that Lululemon online practiced textbook crisis management during pants fiascoby 1) quickly bringing the issue to the public's attention 2) being upfront and honest with the media, customers, and investors, and 3) holding someone accountableby firing the chief product officer Sheree Watson.
All of these actions should only strengthen customer and investor trust in the company.
Most of the recent news suggests this product issue is a short term hiccupin a otherwise great story. Lululemon warehouse sale recently announced that it will be able to fully replenish its inventories by the spring, much earlier than the July/August time frame previously forecasted. The company is also working to strengthen its relationship with suppliers.
In hindsight, investors will look back on this issue as a great buying opportunity.
International:discount Lululemon clothing only has only 25 stores internationally in Australia and New Zealand.
eCommerce:The company's eCommerce channel posted 89% sales growth in 2012 and poised to deliver comparable numbers this year.
New Product Lines:Lululemon outlet online shopping is also expanding into men'sapparel, children's clothing, and cycling gear.
Of course, there are challenges to Lulu's dominance.
Under Armouristrying to take advantage of cheap Lululemon's recent problems to steal market share in the yoga apparelspace. Last month the company launch a marketing blitz with the tagline 'We Got You Covered'. Under Armour is aggressively undercutting where to buy Lululemon cheap prices by 20%30% and have expanded quickly by taking advantage of its well established distribution channels. The efforts are paying off. The company has reported 25% revenue growth in their women active wear segments.
Gap is also making inroads. In 2008, the company acquired etailer Athleta for $150 million. Since then, Gap has opened 35 Athleta locations with plans to open 65 new stores over the next two years. According to analysts, Athleta could triple its current revenue, grossing $500 million by the end of 2014.
Could these big rival sout muscle Lululemon on sale?
Historically, cheaper alternatives have done little to faze the company's core customer. Back in 2009, Target and Victoria's Secretentered yoga apparel at significantly lower price points. The bears cried "margin compression!" but the competition had no noticeable impact on Lululemon sales financial results.
