The Business of Fashion

Lululemon update: Seaweed claims to be removed

Authorities in Canada's Competition Bureau have instructed Lululemon to remove from its labels the claims that the seaweed content in its VitaSea line would reduce stress and provide anti-inflammatory, antibacterial, hydrating and detoxifying benefits to people wearing the garments. Acting Deputy Commissioner, Andrea Rosen, said:

Those claims have to be scientific and they have to be provable. The onus is on the advertiser, not the government, to prove that the tests are adequate prior to making the claims.

Yesterday, in the wake of a Lululemon investor relations breakdown about the seaweed content and the health benefit claims, the Business of Fashion advised Lululemon, especially now that it is a high-profile public company, to back up all of its product claims with clear evidence. Earlier this week when Chip Wilson, the company's Founder, Chairman and Chief Product Designer, was told of the results from the New York Times' test of the VitaSea product, he said:

If you actually put it on and wear it, it is different from cotton. That’s my only test of it.

Sounds like they also need to take our advice to more carefully manage their Corporate Communications and PR. There is an ongoing and raging debate about this, and other LULU issues linked to this incident, over at Google Finance.

Lululemon: Investor relations rollercoaster

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.