Over the past year, Canadian yogawear brand and erstwhile stock market darling Lululemon Athletica has often been cited as proof of
the market opportunity in new-age fashion concepts which pick up on psychographic and
attitudinal shifts -- i.e. that people are looking for more from their clothing than just functional and aesthetic utility. Some people, it is argued, want healthy, ethically conscious, and environmentally friendly feel-good benefits as well. Lululemon was delivering this in spades, while also benefiting from a lifestyle craze centred around Yoga, building a business of close to $150m in revenues.
However, the news all over the North American press this week was dramatically different. The New York
Times published a damning article suggesting that Lululemon's claims about the seaweed content in one of its clothing lines were patently false. Through its seaweed content, the VitaSea line claims to reduce stress and provide anti-inflammatory, antibacterial, hydrating and detoxifying benefits to its wearers, but the New York Times' test showed no evidence of seaweed in Lululemon's clothing.
This sent Lululemon's stock price on a rollercoaster ride. Previously, Lululemon had been enjoying stellar stock performance,
reaching $60 a share after an IPO price
of $25 in July. Yesterday the stock closed at $41.50.
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