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Lululemon Whisper

Lululemon Whisper

Research Question: Will concerns over its sheer pants continue to derail Lululemon?

Companies Covered: Lululemon (LULU)

Report Available: August 16, 2013


Blueshift’s initial research shows lingering and potentially devastating effects from Lululemon’s sheer pants blunder, though the company continues to post impressive sales numbers and remains in high demand with customers and fitness professionals.



  1. On March 18, Lululemon pulled its black luon yoga pants from store shelves and online because of customer complaints about the sheer material being see-through, bringing to the fore concerns about supply chain and quality control. The fallout has been severe with the departures of the CEO and the chief product officer, a 20% drop in stock price after June’s 1Q earnings, and an investor lawsuit over “false and misleading statements” regarding the defective products. Additionally, a July 11 analyst report showed that Lulu is still having problems with sheer pants after claiming to have addressed the issue.
  2. Lulu reported strong earnings for 1Q with a 21% year-to-year increase in net revenue and a same-store sales increase of 6% in spite of a seven-week shortage of its flagship black luon pants. The company also issued 2Q and full year guidance above estimates and same-store sales expectations of a 5% to 7% increase. Lulu showed a robust increase in e-commerce of 40%, representing a two percentage point increase in revenue from the same period a year ago.
  3. Blueshift’s March 11 Lululemon report said that Lulu products remained in high demand despite increasing competition. Sources expected Lulu to be able to maintain its pricing power because it also has become a lifestyle brand. Fitness professionals reported a year-to-year increase in the amount of Lululemon being worn in their establishments, and customer sources have been buying more Lulu products. Concerns focused on fulfillment problems from the holidays, while no source mentioned any issues with material resulting in see-through pants.


To gain insight into the effect of the sheer pants controversy on Lululemon’s market position and threats from competitors, Blueshift will gather data from independent sources in the following silos: Lululemon stores, customers, fitness professionals, supply chain, and industry specialists.


To see other ideas Blueshift Research is currently working on, please click here.