Today was the 2012 fourth quarter earning call. Here are some highlights:
Overall it sounds like lululemon is making the right moves to fix their quality issues. They have recently hired a QA person who once worked for Nordstrom. It sounds like they will be incorporating a bend test (see down father under the Q&A quotes) into their pants QA process, too. It looks like Cuddle Ups and other french terry pieces will be returning for the 2013 Christmas season. It also sounds like some interesting things will be coming for the future - a woman's golf and tennis line. I am kind of excited for a golf line but less excited to hear that "Innovative construction methods like bonding and laser cutting are also elements we’ve played with in this collection." I am so not a fan of bonding and laser cutting. Most of the time the edges are just too harsh on the bonded seams and irritate the skin. Day described the golf line as "technical street with pieces that transition from sweat to street" which sounds very intriguing. In the Q&A section Day further stated the golf pieces are not made of luon.
Also, the men will be getting a lot more polo shirts, especially around Father's Day, for use in golf and tennis. I hope these are made of technical materials. My husband has collected the older polos made of luxtreme and silverescent and he really likes them. The polos will come in both an athletic fit to accomodate a golf swing and a slim fit for a modern look.
Another commuter cycling capsule will also be released.
From the Q&A part of the call:
The Cuddle Up and Cozy Up jacket will return for the 2013 holiday season (yay!). Day said that, "Definitely
the number one learning over the holiday, particularly in the Canadian
market, was that those more $100 price point cottons that they’re used
to having, particularly the Scuba Hoodie, and we usually have something
called the Cozy Up and the Cuddle Up, and there’s a variety of versions
of that that we offer, which we did not this year, significantly
affected that holiday purchase in particular...So
this year, the holiday architecture will include more of those $100
price points and the kind of cotton layering pieces that that guest is
looking for." [I hope that means french terry staples like Lulu Pant IIs will also return. I love those pants].
Great question, "how did it get to where it was shipping without somebody trying on a
pair of pants, like the first batch, to make sure that this wasn’t an
issue, and stopping it before it got so out of control?" Not so hot answer, "The truth of the matter is the only way that you can actually test for
the issue is to put the pants on and bend over. Just putting the pants
on themselves doesn’t solve the problem. So it passed all of the basic
metric tests, and the hand feel is relatively the same. So it was very
difficult for the factories to isolate the issue, and it wasn’t until we
got in a store and started putting it on people that we could actually
see the issue." [I believe eds have chimed in in the comments that the hand feel of the bad batch was different - scratchy and slippery were the words used, I believe. However, I've felt scratchy and slippery luons before (the two-color reversible luons have a slippery, spongey feel to me) for a few years now. Anyway, this question just highlights the lack of a thorough inspection at the acceptance point.]
Day stated that quality is going to be a big concern going forward. I know longtime fans are really, really looking for this: [Question]It sounds like quality is going to be priority number one at
lululemon, and I’m wondering if there are some permanent investments in
gross margin that you think you need to make in order to make sure that
your quality standards are strictly adhered to. And this is sort of the
second quality issue, I think, in nine months. Is there some sort of an
organizational effort to make sure that whenever there are quality
issues that appear anywhere, either in the supply chain or at the
stores, that there is a concerted effort to raise those issues to senior
management and make sure that that behavior is really encouraged so
that the issue can be identified early on, and with the least impact to
the guest?
[Day] Absolutely.
Project Canary, as we’re referring to it. We have made significant
investments since last year. The issue you’re referring to, the dye
issue, where we brought the experts in, rewrote the whole process for
dye, and working in partnership with our manufacturers solved the
problem. So we no longer have dye issues, and so we can very much say
that with confidence. [True, I haven't seen many examples of bleeding in months now.]
And I feel that we will accomplish the same
thing here with the fabrics once we identify exactly where in the chain
the breakdown was, and have long term solutions for this. The big shift
for us is making sure that we have people actually on site in the mills
and the other environments, and that’s the infrastructure that we
started investing in this year. And we’ll continue to do so this coming
year.
The whole organization is obviously very devastated by
what’s happened. And so everybody understands the sense of urgency of
making sure that we alert the small noise and symptoms that we see, the
little canary chirps, getting those to us as quickly as possible so that
we can deploy the resources to avoid anything like this again.[Gosh, I really hope so. Their fantastic luon was what made the company. You would think because of all the attention this issue has received the fabric and quality will only get better. Fingers crossed.]
A question was asked regarding what is being done with the bad pants and whether they will be sold at the outlets. [Day] "Right
now we’re holding all the product, because there actually might be some
treatment solutions that we’re investigating, that actually could solve
some of the problems. So until we get those test results back, we
haven’t made a decision at this point in time. [It's my understanding from five minutes of googling that what leads to a fabric being see-through is the weave. I can't believe there is a treatment process to fix that.]
She talked about some new hires, a woman with prior experience at Nordstrom to handle QA and a man from Speedo to help develop fabrics. I had heard about the Speedo guy before.
Day specified that the affected pants were Grooves, Wunder Unders, and a luon short so that sounds like Boogies or reverse Grooves. Also, a couple of seasonal styles. I wonder whether those were the Presence Pant - anyone try to take back their new Presence Pant? I know for a fact it's not Coast to Class. Those were still hanging in my store yesterday.
Very pointed question about their QA testing process: "Sorry to harp on QC, but it sounds like you were starting at sort of
ground zero. In other words, for other manufacturers, the idea that you
have to put the pants on and bend over to test them out is something
that would happen before they hit the stores. So is that correct? Are
you really sort of behind the curve on processes in general beforehand,
do you think?"
[Day] "I
don’t know of anybody else who has people actually… I mean, at final
proto in garments, where we make up… Of course you would produce all of
those tests, and we do wash tests and do a lot of other things at that
stage. And then when it goes to bulk manufacturing, you’ll do random
sample pulls. But again, I’ll stress that this product passed all
initial testing that we’re aware of, so the whole conversation at this
point has been where did it break down from that initial testing, and
that’s what we’re trying to figure out. You wouldn’t notice the change
from hand feel, and it’s not a simple put it over a mannequin, it has to
be engaged in a four-way stretch for the sheerness to appear. So it’s a
very complex thing to test for, and that’s what we’re looking at, what
can we do a better job of to make sure that we can identify that earlier
in the process."
A good question about the change to men's sizing to have a more accommodating fit and how it affects the market lululemon is going after. [Day]"We
definitely think that it makes it broader, because our core market is
that athletic male and the style should be styled slim, not a slim fit.
And as we’ve made that modification, and brought back things like the
favorite kung fu pant, that sold out very quickly and we went back into
reorder on that." [Some commentary on this. My husband take a lululemon size Small and men's 30" waist. For a few months lululemon dropped the 30" waist on a few items and increased the size of the small waist on their very popular Run: Response, now Pace Breaker, shorts. The sizing change on the shorts happened when they moved the zip pocket from lower on the leg to be opposite the regular pocket. Since they didn't fit him right my husband stopped buying new Run: Response shorts and started searching out the older style on eBay. About six weeks or so ago, lululemon put a sizing notice on their website. Yesterday my husband finally wore the new Frond Pace Breaker shorts to the gym for a run. These were part of the batch that included the refined sizing and he really liked them. He liked the new location of the zip pocket and the fit is perfect. So those men who were sitting lululemon out because your fit had changed, check them out again. It seems it has been tweaked back to where it was before.]
36 comments:
I find it silly that Day claims sheerness is such a hard thing to test for, because you can really only tell when people are 'bent over.' It's athletic wear, is it such a novel idea to have a test group wear the pants through a yoga class, while on the treadmill, or whatever activity they're made for to verify they accommodate said activity?
The website itself had the disclaimer "you may experience some sheerness in our brighter colors so we suggest you do a couple down dogs to make sure your satisfied with coverage." So they know enough to tell us to do it, but it doesn't occur to them to make it a part of the quality assessment?
Overall I'm thrilled to see a promise to improve quality, but Day is definitely hasn't had the more eloquent of responses.
Have you seen this LLA?!? http://www.mindbodygreen.com/0-8207/jimmy-kimmel-on-lululemon-yoga-pants-recall-hilarious-video.html Lol :)
@ Mary - good point. I think they even have on-site yoga classes at their corporate offices and someone would notice sheer behinds in class.
@ NicoleC - I did see that Kimmel bit. It's cute.
Someone needs to release about a 100 flocks of wild yellow canaries in Ms. Day's face since she seems to be oblivious to the year plus complaints by customers of sheerness. Maybe being attacked the sheerness of canaries, pun intended, will also make her open her eyes to the sheerness of all the colored pants as well.
Overall, Ms. Day hasn't struck me as someone who is passionate about the lulu culture they market, the clothing, the lifestyle, etc. Chip must have sniffed luon constantly because he created it and grew the brand and company to what it was until it was passed on to Day. Day needs to stop drinking the coffee and sniff more luon so she can finally get it. Wonder if she's required to do yoga every day like the educators are?
I worked at a "flagship" lululemon store in 2009, in my opinion probably their best year. Our manager at one point was given a pair of wonder unders to try out a new luon. She had to do yoga in them, spin, etc and wear them at the store. Trust me, the bend over test was done in them before. I wish she would just admit the quality has significantly gone down and they are going to fix it. It would keep loyal customers happier. I also don't see how Christine Day is still employed after the bleeding issues and now this.
Christine Day is way too obsessed with making money and international expansion, I feel like she barely cares about the product.
Golf line! Yesssss!
I've been asking for this forever.
@ Victoria - a lot of us "old timers" recall 2009 as one of their best years - the Spirit Pullover, Energy Pullover, sigh... so many goodies. What happened to those designers from back then?
i've just listened to the investor call. i think LLL's sales have been declining for some time now - they now have a very public excuse to justify the lower profits - it's sad b/c i think they pulled a fast one and almost everyone bought it. i know stores have been complaining of sheerness for well over a year (i have several friends working in stores). maybe all companies lie this way but it is really sad. i've got some great LLL stuff - a large collection so i'm really fine not buying for a year or two - really hope they can return to the quality they (and we all) once enjoyed
Thanks for posting! That was HILARIOUS!
I saw a picture of Christine Day on an article by the Star and she was wearing an older LLL hoodie in green/blue. Funny, considering they haven't released any hoodie with the LLL log on the front on the top recently.
Too little too late, Christine Day.
I'm never buying your cheap crap again until you're out of there. Maybe you should head on over to Wal-Mart.
@ anon 4:59 pm - Totally what I think. It's an excuse for lower sales and numbers going forward.
Funny --- I too have styles from 2009 that are still in regular rotation (the run: spirit and the similar one with the cowl neck, among some really well-designed run tights --- weren't the first run of toasty tech tights that winter? They're still my go-to tight rotation). Seems like most of the designers are NYC-educated Americans now, at least the ones I've seen profiled the past several years, the majority of whom don't spend more time than they have to in Vancouver. It's a different aesthetic, looking to the runways for direct inspiration and not, in my opinion, looking first at the sport or activity. And Vancouver's got such a unique aesthetic as a city that I think really came through in the clothes --- a little bit granola but still hip. (Okay, so if it's not clear yet, my bias is I live in Alberta. I count myself more West Coast than East Coast!) I miss that confidence in design, that real individuality that LLL had then in how it thought of its clothes. Now, it's really: Pantone colours of the year + runway trend + cheap tech fabric = premium price.
Oh yeah --- and of course all of this quality stuff is b.s. I've basically returned 3/4 of the merchandise I've purchased in the past six months for quality reasons; a nice way to have an always-updated wardrobe, but annoying. The fabric on my Run: Bundle Up jacket, which I waited to purchase on clearance two weeks ago, is clearly fraying on the elbows after having been worn out running twice. The quality control issues have been endemic, as everyone knows, the luon has been (mostly) junk for ages. I bought some Will crops over the summer, again on clearance, that were acceptable, but that's it; every other luon piece I've touched has been scratchy. But I'm preaching to the choir on that front. :)
Christine Day is a snake oil saleswoman. I spent a few thousand there in a short span (about a year) before the brand went to crap over the last year. I have hardly bought anything this year or last. Day sold the brand down the river. Now I am embarrassed for people to see the logo, like they know I bought into a brand that treated its own customers with disdain over the last 2 years. I often color it in with a Sharpie. Anything to rid myself of the mark of having been taken.
And her attempts to pass the blame to manufacturers are beyond low. I feel such contempt for her, and that contempt has spread to the brand overall.
Most of the stuff in the last year has been ghastly looking, style-wise, so it's been easy to resist. But even the pretty stuff is not so tempting. I want pretty AND quality. Especially for that price. Even We Made Too Much is overpriced.
So now I've moved my fitness gear obsessions over to Beyond Yoga (diamond gussets!), Zobha, Athleta, Splits59 and other well-made brands. Brands whose employees and corporate culture are focused on customer satisfaction, not seeing how much fraying wool you can pull over your customers' (and shareholders') eyes.
I love the idea of releasing a cage full of canaries in Day's face. I can picture it! Or make her go on some morning talk show and bend over for the camera in all the styles of (sheer) pants they are leaving in stores: colored WU, DSPs, etc. If they're not sheer, why not? Let the audience judge the sheerness, if she's so confident it's isolated. Show us your crappy seams, too, Christine -- the very seams you requested to be sewn carelessly, so you could increase your bottom line.
Finally, if she inserts a bend-over test into their QC, it had better not happen in one of their crappily lit dressing rooms. Those are designed precisely for us not to notice this quality loss.
I feel bad for the employees, at least at one of my 2 local stores. They are totally nice and don't deserve to be represented by such a flaming liar.
just my opinion, but please hear me out. I was born and raised in Vancouver, I live here now. I don't do yoga or exercise (I should for my health, but I've always been naturally slim and run hot) but I totally get it- why you love the brand, why the pants are so different, I see the aesthetic. I worked across the street from their flagship store in kitsilano until very recently, in a building with only two commercial business on the second, non street level floor. the business beside us was ( one of?) chip Wilson's investment office.. never got a good idea of exactly what they did. I can tell you that they used to manufacture their clothing in the city of Vancouver, not too far from where I live. that factory no longer has their logo on it. in fact most of the problems you are rightfully complaining about started when the business went public. this you can put squarely on chip's shoulders, it made him an absolute killing and I think happened 2006/2007. I had my doubts about the authenticity of the company when I started to notice that the collective "us" was being urged to" reduce OUR carbon footprint by may 1st!" ( which of course there is nothing wrong with) while both chip and his wife drove around in separate Cadillac escalades.. no they were not hybrid. I asked one of the employees who accosted me on the street why that was ok. she told me he had a really big family( snort). I'm not trying to defend anyone's actions to you but my suspicion is Wilson threw day under the bus for decisions he made a long time ago. he has done a lot of good things, but money changes people, and that is why profits get put before people. that is why you don't see items that are made in Vancouver anymore. and that is why when you hold a garment in your hand you can immediately tell that less of everything has gone into making it. less attention t0 detail, lesser materials, yet you are still paying the same price. you can't put that all on one woman's shoulders.
Also think anon 4:59 nailed it. My thoughts exactly. Funny how male investors are totally duped by this.
I don't care if they can fix the sheerness or bleeding or even the latest tacky colors and unflattering cuts. The lululemon BRAND has now been solidly damaged and I wonder if this is reversible. I for one am now slightly embarrassed to show my LLL logo especially in front of men. The other day some guys at work were making snide remarks about women who wear this brand...very mean so I won't share. But suddenly I feel like people will see me in a certain way when they see my LLL outfits.
Ok, I've seen some photos of Christine Day online, and she has horrible fashion sense- no wonder the golden years of LLL are gone. THe style of LLL has changed drastically- what's up with all these stripes? And, what is up with all these boring tanks- nothing that stands out or even sexy or cute, and no special edition scubas for the holidays? Yeah, when you hire someone who looks like christine day to take over, you get a hot mess because Christine day can barely dress herself. I also agree, there shouldn't be some special "treatment" that can make sheerness on pants go away. If they do that, then they should allow us to return all of your see through pants that we bought and were denied returns because the sales associate said they're not sheer. hagh!
@ anon 8:29 pm - For the last two days I've made sure to wear pants that have the lulu logo at the waist and not visible on the leg. The media attention on this story is over the top.
I think the investors, analysts, and media were caught out by this because: 1) they're not familiar with the brand (how many times do I have to read lululemon is a YOGA company? So many people are unfamiliar with the huge presence they have in running. And, honestly lulu has hardly come out with many new yoga tanks for the past year. They seem to have focused on everything BUT yoga lately. That is another reason for fading sales - not enough tank styles being offered.), and 2) they don't exercise. Very few people get why women have such a brand loyalty to lululemon. If they actually tried the clothing for a sweaty activity I think they'd find out how good the fit is, how functional it is, and how nice their technical fabrics are.
@ Jenables - I totally agree, it started to go downhill when they went public and started manufacturing overseas. I think some of the creative vision left when Wilson left last January, though. The designs got super generic - Forme and Daily Yoga jackets, for example - and the logo stripped away except for the small stick-on lulu symbol. I can't really see Wilson doing that. The ohm symbol used to be heavily incorporated into everything. I mean, look at the gym bags. You can't even tell they are lululemon bags anymore.
I actually agree with some comments above, I started buying lulu because I am really active with Yoga and I love the tanks they offered for yoga- they were unique tanks and very functional at the same time while giving you the support you need to look sexy. All of a sudden, no more yoga tanks! Just a bunch of boxy looking tanks and nasty looking color blocks and stripes all over everything. Then, my pants got really sheer, so i'd only buy certain pants that had the slub denim, or thickly designed, or busy printed fabrics to hide my gentials from showing during my downward dogs. Yes, chip probably had part to do with this whole sheerness and quality issue (Yes, money does change people, so chip wanted more of it), but at the same time Christine day is as much to blame for not keeping the style in orderly fashion. I agree, with luluaddict, I just want my cute yoga tanks back and less of my genitials hanging out. And yes, christine day has a bad sesne of fashion on her part too- never hire someone that looks like that to take over. Let's face it, we are not only into lululemon cause of the fabrics, it's a fashion calling behind it as much as we may or may not want to admit :P
As much as I would love to stop buying LLL, I have not found a brand that works for me. I've tried numerous and either they don't fit well, fabric does not perform (not moisture wicking enough, no compression or too "thick" for sweaty sports) and most of the time, the designs aren't as attractive. Right now I am just very choosy and critical about what stuff I buy at LLL.
I'm still on a lookout for alternatives though until LLL gets their act together (if they ever will).
I have been a Lulu fan for a while but the quality has gone to the dogs. I read the comments above and this is just shameful.
Basically Christine Day said that there are no controls. People are flabbergasted as to how they can put out such low quality.
There are a few other people making so much better stuff. I just bought a pair of Tippy Toe Leggings from YOGASMOGA online after I read a article about them in the Well+ Good blog.
http://www.wellandgoodnyc.com/2013/02/14/a-hot-new-yoga-fashion-brand-launches-with-indian-roots-and-modern-flair/
I loved their Aurum fabric that was so much more luxurious than Luon. And I love their website and their experience.
Overall I think I am over lulu. This just takes the cake. I think its impossible to monitor quality from China/Tiwan. We are just being duped by Lulu as they sell their cheap quality stuf at high prices. At these prices I want something amazing that lasts. Just my 2 cents
Beyond Yoga has a banner on their homepage: "We've got you covered. Our values are transparent - our bottoms are not!"
LOL! The Pantsgate effect.
I feel really silly for getting in the Lulu "trance". I thought the girls at my yoga gym were silly for be so obsessive about Lulu, swearing off everything else.
I too, drank the Kool-Aid, and have been slowly branching away from the brand after so many returns/exchanges. I actually found some really good deals at TJ Maxx/Marshalls, but I also went back to old favorites like Nike and Under Armour....and I am looking to try new ones like Zobha, Zella, and Beyond Yoga.
It will be nice to see what "old school" Lulu feels like, but I have completely given up on their pants. I might buy a piece here and there, but I'm not as obsessed as I once was...nor "loyal" to one brand.
I was hoping that the Ivviva line wouldn't be compromised during the Great Yoga Pant shortage '13, but I can clearly see the young model's underwear line. On the up side, they have some nice looking Blanket Blue leggings.. I'm not sure which is worse- see through pants on children, or the fact that I'm trying to mug them for their leggings!
jenables- thanks for your insight. Especially about Day being thrown under the bus.
I can see that if Lululemon went to its manufacturers and said "hey, we need all of these pants, every few weeks in all of these different colors, oh and give us the good price.." the some trade off could easily have been made.
Thank you so much for all of your blogging, LuluAddict! I'm hoping for some positive R&D after all of this. I imagine some boardroom down face dogs would work well :)
Personally, that customer bend over test is just wrong. I have flabby bottom days, and I have arse clenchingly stressful days. I need my yoga crops to take me through all of these moments.
"Oppugno" is the spell in Harry Potter that releases a bunch of little yellow birds to attack someone...
Just sayin'
Annie- I read a review of YogaSmoga too, and I've been thinking about ordering a pair of their crops. How did the sizing work out for you? Is it similar to LLL? I'm excited about trying them!
@Annie- are the yogasmoga leggings thick? I want to hide some bumps. Also not sheer? Thanks :)
I miss the old school Lulu and all the feminine details like ruffles, rushing, etc. I'm a girlie girl who's a former athlete and like these like details. I'm hoping for a turnaround in quality and the nice details that made Lulu, Lulu ! I also buy Nike, Adidas but they don't have these little details that make the clothes so much fun.
I am happy that the Wall Street analysts have finally started paying attention. I left comments about the decline in quality on seeking alpha after one of the quarterly calls (last summer). I was basically told in subsequent comments that LLL had nothing to worry about because nothing could get between ladies and their butt-enhancing yoga pants. Looking forward to LLL getting their act together so I can buy some new stuff.
FYI... Yoga Smoga offering 50 YS bucks if you email your receipt/ return receipt for see thru lululemon pants... I saw it on their FB page... Haven't received mine yet, but will report back once I receive them...
Anon 7:28. Funny you said that because a lot of men I know seem to think now that women will stop at nothing - not even $100+ price tags or showing their flesh - if they could make their behinds look better. It kills me that this portrays us as being really insecure about our bodies and hoping lulu pants will help attract a few more glances.
Yeh i just wishe they'd go after some of the designers that used to make the best designs w/ all the detail as others have suggestedddd! and if the fabric issue was fixed you could turn this ship around pronto- not rocket science why oh why can't they get it??????
They definitely need some new, interesting tank styles. They seem to just keep bringing back old tank styles in new colors.
12:48 you have made an interesting comment. I believe it is true which to me is very sad if you really think about it. If you think your clothes are what is going to make you feel better about yourself, it's time to start embracing who you are and to love yourself, a pair of pricey nylon pants isn't going to change the way you feel about your body and self.
M
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