Skip to main content

It's too early to say if Lululemon Athletica Inc. is back in shape.

But so far, after last year's public relations fiascos, transparent black pants, production snafus and leadership changes, the yoga-wear retailer has been taking steps to set a new direction.

Laurent Potdevin, former president of footwear specialist Toms Shoes, was hired to replace Christine Day as chief executive officer.

Story continues below advertisement

Earlier this month, a new women's line of fashionable casual wear was unveiled, an offering welcomed by some analysts as a much-needed extension of the brand.

And expansion plans for Europe and Asia are aimed at providing new growth channels.

There are still some wrinkles, however.

For starters, it's an exceptionally tough retail market. Consumers remain cautious and Lululemon's upscale positioning makes it vulnerable.

And there is a growing threat from cheaper-priced players such as Gap Inc.

The Vancouver-based company is set to report fourth-quarter earnings Thursday as observers, investors and analysts look for more signs that a fresh new corporate strategy is unfolding, beyond a quarter that Lululemon warned in January would produce lower-than-expected results.

"Having listened to all of the specialty apparel retailers complain of continued high levels of promotional activity, suffice it to say that the backdrop for Lululemon's already well-known challenging quarter (warned on January 13) is mixed at best," Brian Sozzi of Belus Capital Advisors, noted in a recent research.

Story continues below advertisement

Online sales growth has slowed over than three straight quarters, he added. As well: "There is explosive growth occurring for offerings from Nike and Under Armour. Higher quality and more versatility, for lower prices, than at Lululemon."

Credit Suisse analyst Christian Buss said in a report last month that Lululemon shows increasing signs of eroded customer loyalty, reflected in negative consumer sentiment across all Internet channels and reduced website traffic.

"While product issues have begun to moderate, communication missteps continue to drive core customers to disassociate with the brand," he wrote.

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to