Lululemon Blames 'Public Relations' Issues For Weak Traffic In Q4

Lululemon on FlickrLululemon shares were down more than 11% in early trading Thursday after the company forecast weak sales during the holiday period, despite reporting better-than-expected earnings in the third quarter ending Nov. 3.

In a call with analysts Thursday, Lululemon Chief Financial Officer John Currie attributed the company's weak outlook to slowing traffic in the fourth quarter.

Currie pointed to the slowdown of the economy and a string of public relations problems that has plagued Lululemon this year, including new quality issues with the company's yoga pants, which Business Insider first reported on Oct. 31.

"Let's face it, we have had lots of PR issues this year," Currie said.

Lululemon also landed in hot water recently after its founder, Chip Wilson, said in an interview with Bloomberg TV that some women's bodies "just don't actually work" for his yoga pants. Wilson is stepping down as chairman of the company following his remarks, the company announced Tuesday.

It's part of a larger management shakeup at Lululemon, which includes the announcement of a new CEO, Laurent Potdevin, who most recently led Tom's. Potdevin replaces CEO Christine Day, who announced in June that she planned to resign in June, three months after the company was forced to recall 17% of its bottoms for being too sheer. Day, Potdevin and Wilson were notably absent from the earnings call.

The pants recall and Day's resignation "undoubtedly" impacted sales, Currie said. "Our job is to make sure that's a short term impact by earning back the trust of the guests," he added.

Currie also acknowledged on the call that the market for fitness apparel is becoming increasingly crowded. Some of the major players include Nike, Under Armour, and Gap's Athleta. A few e-commerce startups have also been moving into the space and fast fashion retailer H&M has just launched a new fitness line.

"There's no one competitor that we're looking at... that is having a particularly significant impact" on Lululemon's sales, Currie said. "But the crowded landscape of course makes it more difficult to stand out."