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lululemon athletica, Inc. was founded in 1998 by Chip Wilson with a focus on comfortable, innovative athletic wear for women dedicated to a healthy, fit lifestyle. The company went public in 2007 and has been plagued with product and management issues ever since. Expected revenues for the future have been revised downward and growth in the women's apparel industry is predicted to be -0.4% in the next five years. Can lululemon athletica, Inc. survive? While it has increased its gross revenue in the last two fiscal years, has it turned the corner on past mistakes?
INTRODUCTION
Chip Wilson founded lululemon athletica, Inc. in 1998 and grew the company into a popular yoga apparel business. It became known for its high-quality yoga pants that sold for as much as $98. Celebrities such as Reese Witherspoon, Gisele Bundchen and Kelly Ripa became fans of this brand and lululemon found its upscale merchandise becoming a fashion trend (Thompson & Peters, 2015). Trouble began in 2006 and by 2014 yoga students began to turn on lululemon. Issues have plagued the company off and on ever since. In January 2014, Laurent Potdevin began his work as the new CEO and major challenges awaited him: developing a better supply chain, product quality issues, re-engaging core customers, and delivering growth (Warnica, 2014).
A poor start in the first quarter of 2017 made investors, experts, and investment advisors wonder if the company would rebound or if it will follow the way of other retailers - declining sales, closing stores, and losing the confidence of investors. The company finished Fiscal year 2017 with a 17% increase in gross revenue but with decreases in gross operating margins and net income. However, they opened new stores, are in 12 different countries, and are developing new fabric for women's clothes and bras and men's workout gear (lululemon 2018 10-K; lululemon website 2018).
PAST PRODUCT ISSUES AND SOME CURRENT SUCCESSES
In 2006 lululemon athletica was selling bags in its Vitasea line that were made of seaweed fabric. They claimed that the fabric released amino acids and vitamins onto the skin that reduced stress to those carrying the bag. A 2007 New York Times investigation found that the fabric contained no seaweed, it was made of cotton, and...