Lululemon in Trouble
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Case Code: BSTR538 Case Length: 15 Pages Period: 2016-2017 Pub Date: 2018 Teaching Note: Available |
Price: Rs.400 Organization: Lululemon Athletica Inc. (LULU) Industry: Clothing Retail Countries: US, Canada, Global Themes: Corporate Strategy, New Product Development, Brand Strategy, Market Assessment |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
On March 30, 2017, the shares of Canada-based ‘yoga-inspired’ designer, distributor, and retailer of athletic apparel Lululemon Athletica Inc. (LULU) tumbled by 21 percent. Reportedly, it was LULU’s biggest one-day percentage loss in more than eight years. The sales drop, which came just a day after LULU’s warning that sales would fall in the first quarter, left investors stunned. LULU was expected to grow after it posted stronger holiday sales than many other retailers in early 2017.
Apart from a falling preference for athleisure wear, the poor beginning to the year was attributed to the company’s slow start on the e-commerce platform due to the absence of bright and bold colors. The CEO, Laurent Potdevin (Potdevin), claimed, “We have clearly identified the issues: An assortment lacking depth in color for spring, compounded with visual merchandising that did not powerfully translate our design vision”. To counter the situation, the company decided to launch more colorful clothes on its website. Analysts, however, felt that LULU’s problems were not just internal. It was facing intense competition from companies like Nike, which was more than 10 times its size...
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