Filed under: Retail, Apparel, Scandals and Lawsuits
Lululemon athletica (LULU) was on top of the world.
The retailer of upscale yoga and fitness apparel saw sales soar 37 percent in its latest fiscal year, fueled by an impressive 16 percent spike in comparable store sales. Lulu’s bottom line was even hotter, as diluted earnings skyrocketed 46 percent for the fiscal year ending on Feb. 3.
Then came the sheer yoga pants.
An imported shipment of the company’s iconic black Luon pants proved to be embarrassingly see-through. The chagrined retailer didn’t catch the mistake in time and after complaints started pouring in, it was forced into a recall.
There’s always a scapegoat, and after originally pinning the blame on its Taiwanese supplier, Lulu offered up a sacrificial lamb of its own by showing its chief product officer the door.
The yoga retailer had it all, but then it had one controversy too many. But it’s not the only company that has suffered from potentially corporate-destructing mistakes.
There’s no such thing as ‘too big to falter’
It often takes just a simple mistake to unravel a killer brand. Have you seen the saga playing out at J.C. Penney (JCP) these days? CEO Ron Johnson is now ex-CEO Ron Johnson after making the fatal blunder of assuming that it could wean customers off of sales and coupons.
There is no company that is too big to falter the moment that consumers turn. If you don’t believe that, pull up the stock chart for tech giant Apple (AAPL) just after its Apple Maps fiasco during the iPhone 5 launch. Ouch!
Let’s look at a few other big brands that consumers turned on before winning back the public. That may be doing well now, Lululemon, take heart.
Chipotle Mexican Grill (CMG)
Few burrito rollers have the same kind of fanatical following as Chipotle. The “food with integrity” mantra strikes a chord with young diners, but the model featuring quality eats pieced together quickly on a fast-moving assembly line is what keeps customers from bolting when they see the long lines.
Despite the lunchtime queues that snake their way to the counter, Chipotle has courted controversy before. In 2011 it came under fire for hiring and then firing undocumented workers. In 2012 Chipotle was taken to task for its practice of rounding off bills to the nearest nickel at some of its high-volume eateries to keep the queue at the register moving quickly.
Hiring illegal immigrants at a time when the country’s unemployment rate was high? Angering the other side of the argument after unceremoniously letting them go? Deliberately overcharging some customers, even if it was just by a penny or two?
Carnitas-craving customers have forgiven Chipotle.
Netflix (NFLX)
Shares
From: http://www.dailyfinance.com/2013/04/11/lululemon-chipotle-netflix-starbucks/
