These are stories Report on Business is following Thursday, March 21, 2013.
Too-sheer pants to hit Lululemon profit
You've got to hand it to Christine Day for one of the best lines ever from a Canadian CEO.
"The truth of the matter is: The only way you can test for the issue is to put the pants on and bend over," she told analysts today as Lululemon Athletica Inc. detailed the cost to the yoga wear retailer of the recent controversy over the company's see-through pants.
"Just putting the pants on themselves doesn't solve the problem," the Lululemon chief executive officer said as the company also posted fourth-quarter profit that topped analysts' estimates, The Globe and Mail's Marina Strauss reports.
"It passes all the basic metrics tests. The hand feel is relatively the same. It was very difficult for the factories to isolate the issue. It wasn't until we got it into our store and started to put it on people that we could see the issue."
Lululemon is recalling some of its famous black pants because of what it describes as an unacceptable "level of sheerness," and is working to fix the problem.
"Our proprietary fabric, black Luon, is a very technical and sensitive product to manufacture," Ms. Day said earlier in a statement..
"We have a long history with our manufacturers and as we have in the past, we are working closely with them to resolve the current issues. We have a team on site collaborating with them to identify the root cause."
The company posted a fourth-quarter profit of $109.4-million (U.S.), or 75 cents a share, up from $73.5-million or 51 cents a year earlier. Revenue climbed to $485.5-million.
Same-store sales, a key measure in retailing, increased 10 per cent.
But the pants issue, it said, is expected to cost between $12-million and $17-million in lost revenue, hitting first-quarter profit to the tune of 11 cents to 12 cents.
Over all, it expects first-quarter earnings per share of between 28 cents and 30 cents, also pinched by a writedown tied to the pants trouble.
ECB warns Cyprus
European monetary authorities are giving troubled Cyprus until Monday to come to terms with international lenders on a bailout plan, prompting reports of long lines at bank machines.
Turning the screws today, they warned that emergency funding to the country's banks would otherwise be cut.
"The governing council of the European Central Bank decided to maintain the current level of Emergency Liquidity Assistance (ELA) until Monday, 25 March 2013," the ECB said in a statement.
"Thereafter, Emergency Liquidity Assistance (ELA) could only be considered if an EU/IMF program is in place that would ensure the solvency of the concerned banks."
Cyprus has rejected demands for a hit to bank depositors in a bailout by the European Union and International Monetary Fund.
"This is very much in keeping with the ECB's strategy during past crises, namely, it has made its actions conditional on political decisions being taken, and has refused to simply give blanket backing to stressed sovereigns or institutions in a fashion that lets elected officials duck making hard choices," said Derek Holt and Dov Zigler of Bank of Nova Scotia.
"The ball is now back in the court of the EU and the various countries with stakes in the Cypriot financial system."
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