Sheer no more: Lululemon's Luon pants return to stores; analyst says no lasting brand damage
Yoga pants on display at the Kitsilano Lululemon store in Vancouver Thursday, October 18, 2007. (Richard Lam / THE CANADIAN PRESS)
NEW YORK -- Lululemon is starting to get its Luon black yoga pants, which were pulled in March for being too sheer, back into its stores.
That bodes well for the company, analysts said Monday. And the see-through snafu didn't affect Lululemon's brand too much, says Canaccord's Camilo Lyon.
Lululemon Athletica Inc. had blamed the sheerness on a style change and production problems. It hired a new team to oversee the making of the pants, which cost about $72 to $98. The company has said it expects to lose $57 million to $67 million in revenue because of the pants problem.
But that hasn't mattered much to its stock. Since the company announced it was pulling the pants off shelves, its shares are up about 18 per cent.
The company said Monday that it will be steadily increasing the stock of Luon pants throughout June. The "inkwell Wunder Under" yoga pants were available Monday on the company's website, and checks by Wedbush analysts found the black "Groove" and "Astro" pants in stores across the country over the weekend.
Wedbush said its research indicated that "customers were please(d) with the opacity of the pants" and that demand for them means more people went to Lululemon stores in the past few days.
The see-through pants won't leave lasting damage on Lululemon's brand, said Canaccord Genuity analyst Camilo Lyon, and that the current quarter will get a sales boost from pent-up demand for the pants.
Lyon, who has a "Buy" rating on Lululemon, raised the chain's price target to $92 from $87.
Shares of Lululemon Athletica Inc. added $1.53, or 2 per cent, to $79.34 Monday afternoon.