≡ Menu

Operation Greatness Scaledown! Lululemon Too Big For Britches, Diminished Returns

in Business of Yoga, YD News

lululemon-shopping-cart-reverseHey! As we anxiously await the presumably flat First-Quarter Profit announcement from Lululand (UPDATE: Lululemon Athletica profit drops; guidance misses), we present to you the hot scoop! We shouldn’t be telling you this, lollie-spies are everywhere. But we’re not ones to hold back. Lululemon is launching a top secret line for a totally newfangled sport. OK, so it’s actually not brandie new, it’s an ancient art in the public forum. Can you guess? It’s called Backpedaling!

Christine ‘Chief Lulu’ Day leaks the news, leads the Backpedaling Team:

“I think it was really ambitious for the company to grow to 35 stores on the small base of stores that it had from a people and operating process,” Day said after the company’s annual meeting in Vancouver Wednesday.

Uh oh…we’re sorry, what? Ex-Starbucks CEO says too many stores?

“To be honest, I was trying to figure out how to tell the story to the market that I would like to only grow to 15 to 20 stores,” said Day, a former Starbucks executive.

“Of course you’d always like to be able to grow more, but it’s more important to get 300 stores done one at a time right, rather than it is to hit a number.”

Classic! In true Backpedaling form Ms. Day takes the reigns and drives us home. But we know in all Backpedal matches the winner is always a loser somehow. Drat! Curses!

Well, what do you know. Even with the newly launched Greatness of E-Commerce (pushed out months before originally planned, and after a sad stumble), the Recession has taken its toll on the luon mammoth from up north. Still, lulu HQ is expecting (read: crossing all of their phalanges), and loosely promising that online will account for 10 percent of its annual sales. Speaking of sales, they’re not great, and e-lulus have already resorted to a “Loot” section, offering discounted garb for like only half your unemployment check instead of a third. Go figure.

Surely, Chip the fearless leader will set us back on track…

We probably weren’t as diligent about where we put our stores in the U.S. as we thought we would be, and so what happened is that we were probably growing a little bit beyond our means,” said Wilson after the meeting, dressed in Lululemon shorts and tshirt.

Wilson said the “silver lining” to building only six or seven stores this year is that it can focus more on its people and the yoga, running and other athletic-style clothing it produces.

There’s Wilson in the Backpedaling sidecar. Ah well, at least we’ll always have the Chipmeister cheerleading, even if they have to close down stores! Wait, what do you mean he might leave us??

Wilson said he is sticking with Lululemon for the future, but sees possibly doing a side business someday with at least two of his five sons, the oldest of which is now age 20.

“I think as a family we are going to keep our shares as intact as we can,” said Wilson.

Aw, nuts! Side businesses never mean good news. And “keep shares as intact as we can”? Come on Chip, don’t let mediocrity beat you now!

First-quarter revenue should be in the range of US$70 million to $75 million, not that far off from what’s expected on the street, and still OK compared to peers, yet investors and traders are preparing for impact. The volatile market has seen LULU trading price range between $5.60 in March and $30.50 in late June last year. The Old Navy shenanigans may have done their job.

Will Lulu recover and hang on? Well that’s up to you fine folks now isn’t it? Can we count on the Yuppies?

Oh we know what you’re thinking…as long as they don’t renege on that whole butt-enhancing thing!

[Stockhouse] [Canadian Press]

Read all in Lululemon

Earlier…SHOCK: Lululemon To Open Yoga Studios in Major Cities: NY, LA, SF?

0 comments… add one

Leave a Comment