Lululemon Athletica Inc. (NASDAQ: LULU) has a serious brand damage in the making. the question is whether it is permanent or whether or not it will pass over. The company’s scandal has moved from see-through pants and material balling up, and now it includes the company’s founder in a public relation blunder that he created. The Gap, Inc. (NYSE: GPS) may be thanking the company for both issues.
This “Size” dilemma is nothing new. Abercrombie & Fitch (NYSE: ANF) has been under fire previously for its stance against big clothing sizes. The company’s stance was that its clothes are not made for larger people. A&F’s shares have been in the gutter, but this sure seems like a series of product missteps and weaker sales which likely had nothing to do with turning larger-size buyers away.
Lululemon founder Chip Wilson has recently apologized to his workers in a video after a Bloomberg interview where he said that some of the issues from the pant dilemma are simply that the pants might not work well on women of certain sizes with rubbing issues.
The reality is that some of these comments may simply be true, but how that message is conveyed or whether or not it should have been conveyed is another issue entirely. It is true that some people just do not look good in certain clothes. How people come to that realization, and how they are told about that, is a dilemma.
Why The Gap, Inc. (NYSE: GPS) can win here is that Gap does cater to larger sizes in many cases. Its Banana Republic stores have often not really catered to larger sizes, but Old Navy and Gap have larger sizes. The real opportunity is its newer Athleta line that has grown in popularity. What the public needs to understand is that its models and its clothing are not exactly flattering in many of the larger sizes either, but the company could still possibly capitalize at Lululemon’s expenses.
Athleta has a large mail catalog business, and it has had retail stores since 2011. There is an opportunity for it to attract even more of the Lululemon customers, but the store concept just might not be widespread enough to make much of a difference. We warned back on November 1 that the risk was more than meets the eye here for Lululemon investors, and shares were closer to $67.50 then. That was before this blunder turned into something worse.
This is something that needs to be paid attention to. Lululemon shares closed down another 2.9% at $66.95 against a 52-week trading range of $59.60 to $82.50. It still has a whopping $9.7 billion market cap versus $19 billion for The Gap, but last year’s annual sales were $15.65 billion for Gap versus $1.37 billion for Lululemon.
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This public dilemma of Lululemon is an interesting one. There may not be a clear answer. Companies do deserve the right to have their designs made for certain customers. Perhaps the biggest issue is simply how they handle delivering that message. Slogans like “Fat people go elsewhere” are not going to give you the best reputation in the public. Simply stating “We have a target market that includes a range of sizes, and that is what we are sticking with” may be a better direction.
As the economy continues to improve, it's pretty clear that the Fed will curb its buying of securities to signal a change in interest rate policy. The very mention of this has caused Treasury yields to increase, but let's not get ahead of ourselves.
) announced its second quarter and first half earnings results, posting increases in sales and earnings.
Alamy Personal finance author Barbara Stanny realized she was earning too little money when she interviewed women bringing home six figures or more for one of her books. "Of the first 15, three of them were writers. It was such an empowering thing for me to see. There were people doing what I was doing, but they were making more," she recalls. She committed to follow their lead, and before she finished her book, she had started earning six figures herself. Earning too little money, which Stanny defines as earning less than you need or desire, despite efforts to do otherwise, is a problem so common that Stanny started giving workshops on the topic. Eventually, it became the subject of her next book, "Overcoming Underearning." Others have also tackled the issue: Underearners Anonymous, a support group based on a 12-step program, is dedicated to helping people who find themselves trapped in a low-income cycle. And Bari Tessler Linden, a popular financial therapist, addresses the topic in her work, too. Tom Anderson, a freelance writer based in New York, wrote about visiting an Underearners Anonymous meeting for the financial website LearnVest earlier this year. "The median age was mid-40s, and it was a pretty diverse bunch of people from all different socioeconomic backgrounds," he told U.S. News. The session focused on improving time management skills, goal setting and being more career focused, he says. After the meeting, he says, "I did adjust my own expectations for my finances and what revenue targets I wanted to hit." Anderson says he would recommend the experience to anyone who is comfortable with the spiritual side of 12-step programs and who is not doing a good job of valuing their time, which often has a negative impact on earning power. (Underearners Anonymous did not respond to requests for comment.) Financial therapist Linden says in order to overcome her own struggle with underearning (in her 20s, she worked in hospice and as a counselor, and she couldn't afford organic food), she had to first learn to value herself better. "I had to do a lot of work on cultivating my value and what this means to me," she says. She also had to learn that it was OK to want to earn more money. "I thought if I did good work, money would just appear. But it also did not feel spiritual to me to strive for money," she says. Still, she knew she had to find a way to earn more. So she took on extra overnight shifts at hospice, but was still stuck earning less than $2,000 a month. She took on a second job, and eventually earned enough for some small indulgences, like chocolate. Then, she learned about bookkeeping, took on clients and started earning more money. Today, she's built an online business based around her financial therapy and coaching work that allows her to earn a six-figure income. "It's about the numbers, but of course it's also about having a deeply meaningful and joyful life, giving amazing work to the world and having a great lifestyle. And we all define that in our own ways," she says. As for Stanny, she says her own underearning struggles grew out of larger money issues. She recalls her father, one of the founders of H&R Block (HRB), teaching her little about smart money management. "The only thing my father ever told me was, 'Don't worry,'" she says. Later, her husband, a compulsive gambler, created a new set of financial problems for her. She finally decided she had to learn how to manage (and make) her own money. Overcoming underearning is all about shifting your thinking, Stanny says. "We tend to push our financial problems under the rug and ignore our problems and think they'll go away. [Instead,] I made a decision: I'm going to overcome underearning," Stanny says. Making that kind of mental shift can be uncomfortable, she adds, but it's essential for making a significant change. The biggest lesson she learned from high earners, she says, is to say yes to opportunities. "If any opportunity comes along, as long as it's not illegal or immoral, they just say 'yes,'" she says of high earners. Even if something makes them nervous, like a new speaking gig, high-earners welcome the opportunity. To overcome her own under-earning trap, Stanny started raising her speaking fees. It made her uncomfortable, and for the first three months, she got few takers, but eventually, she started booking gigs at her higher rate. "I knew I deserved to earn more for no other reason than I'm worth it," Stanny says. Cultivating that sense of self-worth is crucial for overcoming underearning.