Lululemon Is Benefitting From The Sheer Yoga Pants Debacle
The yoga retailer's shares are soaring on news that it would probably replenish all of its pants by early June, the Financial Post reported.
This is much earlier than the company's previous estimate of July or August.
And Lululemon's deft handling of the issue won over more than just Wall Street.
"We believe demand for Lululemon gear has not suffered from this transitory quality control issue, and likely benefited from the publicity," Camilio Lyon at Canaccord Genuity wrote in a note to clients today.
After Lululemon realized that some of its black luon pants were too sheer, it quickly issued a statement and recall. The company then offered refunds to anyone with affected pants.
Weeks later, the company said it had discovered and fixed a discrepancy in its testing system. Sheree Watson, the company's chief product officer, also stepped down.
The company's careful management of the crisis led to a quick recovery that has analysts saying the company is stronger than ever.
Still, the positive attention came at a price: it's estimated the debacle cost Lululemon $67 million.
Here's a chart showing Lululemon's share price spiking in the month since the yoga pants crisis:
