This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Lululemon Acts When the Founder Becomes a Liability

Shares that traded in the single digits during the first half of 2009, then rose, split in 2011 and rose again to the low-$80s, suddenly fell in June like a yogi on a slick mat, to the low $60s, after the company announced a disappointing quarter and added that CEO Christine Day would be leaving. 

What turned a problem into a life-or-death crisis came in November when Wilson blamed womens' bodies, specifically their thighs, for his product's problems. You might say he really harshed their mellow.

The man appointed to save this company from itself is Laurent Potdevin. Most profiles of him emphasize his work at LVMH, the European luxury goods conglomerate. But it's probably more important that he comes directly from Toms Shoes, a retailer with its own strangely messianic CEO, Blake Mycoskie. 

Mycoskie is less interested in retailing than he is in making a difference in the world. He calls Toms a global movement, giving away a pair of shoes for each pair sold, styling himself "chief shoe giver" rather than CEO and writing a book in 2011 called Start Something That Matters

Toms, in short, is not about the shoes. It's about the image, which is based on a mission. That's what people thought Lululemon was about -- the mission of a healthier life, an image of mind and body in harmony.

If Potdevin can put the company's image and reality back into sync, his company has a huge opportunity. Of all the big athletic companies, Lululemon is the only one that skews female.

Competitors like Under Armour  (UA) skew male. Early this year, these two companies were about the same size. Now, thanks in part to Lululemon's missteps, Under Armour's sales are more than twice those of Lululemon.

So the company has a lot of ground to make up, but if it can recover its image it has a chance to make up that ground. The company may still be overpriced, at about nine times its annual sales (against 4.5 for UnderArmour) but it can still be saved.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs