Chip Wilson touched off a storm of controversy when the founder of Lululemon Athletica Inc. suggested that women's body shapes were to blame for the chain's too-sheer black pants problems.
Social media sites lit up last month with criticism about him for encouraging a culture of skinny women for Lululemon's pricey yoga wear. A 1,200-signature online petition called on Mr. Wilson to "apologize for offensive remarks" and expand the chain's range of sizes.
To add fuel to the fire, last week a Lululemon store display in Bethesda, Md., played up Mr. Wilson's comments, which were made during a television interview. "Quite frankly some women's bodies just actually don't work for it," he had said. "It's really about the rubbing through the thighs, how much pressure is there."
The Bethesda store featured on its windows the message: "love: cups of chai/apple pies/rubbing thighs?" Lululemon followed it with a Twitter note: "We're deeply sorry, the display is being taken down. We celebrate that thighs rub together – ours do too."
On Thursday, Lululemon executives will have time to respond more fully when the company releases its third-quarter results and they speak to analysts on a conference call.
Many analysts believe Vancouver-based Lululemon will survive the firestorm unscarred. More damaging have been its troubles with see-through yoga pants, which forced the company to pull them last spring and take a $17.5-million (U.S.) writedown. The company blamed the snags on production issues. But complaints about the quality persisted into the fall.
Faye Landes, an analyst at Cowen and Co., said her firm's survey found that consumers who owned Lululemon products were largely positive about the brand and did not appear to be distracted by "Chipgate." Only 8 per cent of the respondents "related negatively to the brand," she said.
Christian Buss, an analyst at Credit Suisse, said last month that the retailer's inventory challenges "are being resolved." Its level of online discounted merchandise, which shaves profit margins, dropped to an average of 3.4 per cent from December's record high of 6.9 per cent, although that was up from 2.6 per cent at the end of August, his mid-November analysis found.
Year-to-date, Lululemon's stock has fallen more than 8 per cent and underperformed the S&P 500 by almost 33 per cent during the past year. The company has yet to replace chief executive officer Christine Day, who unexpectedly announced last June that she would step down when a successor is chosen.