Tomahawk, WI 9/13/2013 (BasicsMedia) – If you have ever bought and used some technically produced athletic apparel, chances are that it was the product of Lululemon Athletica Inc. (NASDAQ:LULU). The primary markets served by this company include North America and Australia. The apparel is yoga-inspired while the company continues to come up with some wonderfully effective accessories such as yoga mats, socks, bags, water bottles and underwear to mention but a few. It currently boasts of some 174 stores located in the U.S, Canada, New Zealand and Australia. Is it a good stock to invest in?

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LULU’s current quarter results haven’t been among the best. The company attributes this course of events to the fact that its yoga pants were recalled earlier this year, and probably clients haven’t forgiven LULU for such an embarrassment. You have to remember that most products manufactured by this company are designed for the high-end consumer who is very choosey. Such a customer doesn’t take kindly to events such as the one mentioned here regarding LULU’s decision to recall its yoga pants. The effect has been felt in the lack of good sales in this quarter.

Reasons for LULU’s Poor Showing During Summer of 2013

LULU’s summer products never sold as well as the company might have expected. What is more, the company had to move into the fall with its summer products and this hasn’t augured well for LULU. The company expects this trend to continue until the end of the fiscal year some time in February 2014. In 2013 alone, the company’s stock has dropped by as much as 15%. In the recent trading sessions, the company witnessed a drop in its shares by as much as 6.5% thus settling at around $64.57 per share. There is real belief that this could continue for some time.

Why Did LULU Recall Its Yoga Pants?

LULU’s decision to recall its yoga pants was based on numerous complaints filed by consumers to the effect that the colors were fading on certain tops. This sheerness problem was damaging the company’s reputation and brand thus the decision to recall the products. Unfortunately, the recall was quite expensive and created a huge dent in the company’s finances. The black luon pants, which the company considers to be one of its core products, are yet to be brought back into the market. The knock-on effects of this decision will continue till the end of 2013.

The decision to recall the yoga pants have had a devastating effect on the company’s results in the current quarter. There has been a delay in bringing the fall products into the market by around three and a half weeks. This is probably one of the reasons why the company reported profits of around $56.5 million for the quarter ended August 3, which is a drop from the figure it reported in the same period last year of $57.2 million. However, there has been an increase in revenue and same store sales.

The company has now been forced to lower its expectations for the rest of the year. Where it had expected revenue of around $1.67 billion, it has now lowered this to $1.64 billion. This doesn’t take anything away from the fact that LULU is quite a profitable stock and worth adding to any investor’s portfolio.

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