Lululemon (LLL.TO) shares recently fell from $72 to $64 (an 11% fall) due to a sheerness issue with it’s signature yoga pants.
It’s difficult to believe that this will be a long-term problem for Lululemon or that an 11% haircut is justified. However, for a beloved brand like Lululemon a single quality issue can shake consumer confidence and send the brand (and the stock) into an irrecoverable tailspin.
The company seems to be handling the issue well though – recalling the too-sheer pants and moving on.
I think that Lululemon might be good for a 10% recovery in the next couple of months. Sadly I have no spare cash to trade it!