retail-apparel

Yoga pants maker can survive PR nightmare - retail expert

June 13, 2013 at 11:48 AM ET

Video: Lululemon, the popular yoga and fitness brand, had another challenge this week with the announcement that the CEO is resigning in the wake of the controversy over too-sheer pants. TODAY’s Matt Lauer reports and retail analyst Dana Telsey discusses the future of the brand.

There's nothing see-through about how Lululemon Athletica will overcome its recent image nightmare.

Just sell more of the pants once they are no longer so sheer that nothing is left to the imagination, a Wall Street expert told TODAY on Thursday.

There's no reason that the clothing maker, forced to withdraw the line because they failed the bend-over test, cannot survive that public relations disaster and also the loss of its charismatic CEO and a resulting stock plunge, Dana Telsey said.

"Get the black Luon pants back in and the consumers will be buying," said Telsey, a retail analyst with The Telsey Advisory Group. "They're coming in now."

TODAY anchor Matt Lauer asked Telsey about the implications for Lululemon following this week's announcement that Chief Executive Officer Christine Day was voluntarily stepping down, sending the company's stock down about 18 percent from a high of $82.50.

Separately, The Wall Street Journal reported on Thursday that Lululemon's Chairman Dennis "Chip" Wilson sold stock worth $50 million days before shares slumped on the news of Day's surprise departure.

Wilson, who founded the company in 1998 and remains its largest voting shareholder, set up the sales plan in December, said the Journal, citing InsiderScore.com, which tracks insider trading and institutional ownership.

The Securities and Exchange Commission allows company executives to trade their own stock by using a preset plan known as 10b5-1, even when they have access to private information.

On Today, Telsey said none of that corporate news matters to customers.

"It's about the product, getting in new stock and (other) categories to extend it," Telsey said.

As for Day's departure after eight years, in which she helped steer the company public, Telsey said it was probably time for a change as the company was looking to grow and needed an executive with more specific skills in that area.

"Christine Day did a terrific job building sales and building earnings," she said.

"She built the (brand) identity: next stop? global growth. It takes a different skill set versus building a brand," said Telsey.

Reuters contributed to this report.

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