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TheStreet Open House

Lululemon Acts When the Founder Becomes a Liability

Stocks in this article: LULUANFUA

NEW YORK (TheStreet) -- In retailing, image is everything.

Defining your image then protecting that image is job one for any retailing chief executive. When a CEO's image runs counter to the brand's message, it's time for a realignment.

The short version for what Lululemon Athletica (LULU) has said in hiring a new CEO and announcing founder Dennis "Chip" Wilson will be leaving the company next year, is: Don't ANF me, bro!

ANF, in this case, is Abercrombie & Fitch (ANF), which this week doubled down on CEO Mike Jeffries despite a series of gaffes seen as insulting to the store's less-hot customers.

Lululemon's image is not like that of Abercrombie & Fitch. If Abercrombie's image is of someone who is too cool for school, a young Paris Hilton or Kim Kardashian, then Lululemon is a serene, together grown-up, more like Diane Lane or even Helen Mirren.

Lululemon makes yoga wear. It rose to prominence as aging baby boomers started to find high-impact exercise too stressful for aging joints and decided a calmer, internally focused workout might be the thing to make our golden years more golden.

Wilson rode that zeitgeist with clothes that yoga followers, and those who wanted to be seen as yoga followers, liked. They hugged the body, they stretched, they were useful as well as comfortable and they could even be worn outside the gym or yoga studio.

Wilson extended the line, making Lululemon a "yoga-inspired athletic apparel company," moving into running gear, fashion and lifestyle products, sold through branded stores, from the company's base in Vancouver.

The trouble began with quality control problems, things like bleeding dyes, fabrics that were too bright and, finally, a recall of some yoga pants in March for being too sheer.

Lululemon had always kept its inventory as tight as its clothes, in order to sell them at full price. The quality control problems backed up into the stores, costing sales.

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