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Lululemon cuts full-year outlook amid struggle with ‘newness’ in its womenswear

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Lululemon Athletica Inc. cut its full-year outlook Thursday as its CEO admitted the company has grappled with some “missed opportunities” in its womenswear business.

The Vancouver-based apparel company’s new guidance shows it expects to end the fiscal year with net revenue between US$10.3 and US$10.4 billion, down from its prior forecast that ranged between $10.7 billion to $10.8 billion.

The cut came as CEO Calvin McDonald conceded the company’s womenswear division has struggled with “newness,” which he described as seasonal updates to the business’s colours, prints, patterns and silhouettes.

“It’s become clear to us that this reduced newness, which is below our historical levels and stems from earlier product decisions, has impacted conversion rates, given the fewer new options available to our female guests,” he told analysts on a Thursday call.

The reduced level of newness was most pronounced in the company’s range of bottoms, but its digital operations had hiccups, too.

“In our online channel, the newness that we had performed well, but we simply did not have enough to inspire her to purchase,” he said.

To rectify the situation, Lululemon shuffled some workers in the product arm of its business and has been fast-tracking design processes for its performance, shorts, tops and tracksuit categories to introduce more newness to its assortment as quickly as possible.

McDonald anticipates the company will return to its historical levels of newness no later than spring 2025.

Despite the challenges, Lululemon’s second-quarter net income increased to US$392.9 million from US$341.6 million a year prior.

Net revenue for the company, which keeps its books in U.S. dollars, totalled US$2.4 billion during the period ended July 28, up from US$2.2 billion during the same quarter last year.

Net revenue attributable to Lululemon’s international markets rose 29 per cent over last year, while the portion linked to the Americas rose by one per cent.

Lululemon’s diluted earnings per share were $3.15 compared with $2.68 in the second quarter of 2023.

Neil Saunders, managing director of GlobalData, saw the results as “overall solid,” but expected that the slowdown Lululemon saw in its North American market will “set alarm bells ringing.”

“With less impressive numbers coming through and growth virtually flatlining in overall terms, and declining in on a comparable basis, it is raising a question as to whether Lululemon has finally reached its ceiling in the U.S. and Canada,” he said in a note to investors.

During the quarter, the company began to enter the spotlight as it prepared to outfit Team Canada at the Olympic Games in Paris, but it also had a stumble.

In late July, mere days before the quarter wrapped, Lululemon announced it was pausing sales of its new Breezethrough product line of tights and other activewear.

Many of the line’s pieces featured a long V-shaped waistband in the front and Y-shaped seam in the back that some consumers complained was unattractive and produced a “whale tail” look.

“While guests were excited by the fabric, the design didn’t meet their expectations,” McDonald said Thursday.

Pausing sales on the Breezethrough line had a “negligible impact” on Lululemon’s performance during the quarter, McDonald said, but he characterized it as the “right step” and said the company would reintroduce the fabric in the future.

A focus on innovation and newness would be wise, Saunders hinted in his note to investors Thursday.

He called for Lululemon to use “a bit more effort around the core assortment which, while still impressive in terms of quality, lacks some of the oomph with new drops coming across as a bit ‘samey.'”

“This is not good enough to drive growth among a more reluctant consumer and in a market where choice has been expanded,” he said.

Analysts have been closely watching how Lululemon competes with rivals like Alo and Vuori, which are quickly gaining traction with shoppers, and brands such as TravisMathew that play in the golf space Lululemon has been pushing into.

Because Lululemon is so new to the category and is still largely dabbling in it rather than being aggressive, Saunders said it has likely not tapped into the full customer base available.

Despite the competition and shoppers spreading their spending out among more retailers these days, he said Lululemon has been able to hang onto its core customer base.

“Overall, Lululemon remains a very good retailer and brand with an impressive track record,” he said.

“However, the miracle it has worked for so long seems to be fading.”

This report by The Canadian Press was first published Aug. 29, 2024.

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B.C. to ensure fruit growers impacted by co-op closure are paid for past harvests

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VICTORIA – The British Columbia government says it is taking steps to ensure tree fruit growers are compensated for past harvests after the closure of a co-operative that had served farmers for almost 90 years.

It says the Investment Agriculture Foundation of BC is “redirecting” about $4 million in provincial funding that will be used to ensure co-op members receive money they are owed.

The province says the foundation will pay growers in the coming weeks and then recoup the funds at the end of the court process involving the BC Tree Fruits Cooperative that filed for creditor protection last month.

In July, the co-op, which processed, stored, packaged and sold fruit for 230 member farms, announced it was shutting down after 88 years of operation.

It says it has more than $58 million in liabilities.

The agriculture ministry says it is has also provided $100,000 to the BC Fruit Growers Association that will go toward food-safety certification that was previously done by the co-op.

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.



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Ceiling high for Vancouver Whitecaps midfielder Ahmed: Canada coach

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VANCOUVER – Jesse Marsch issued Canada’s men’s soccer squad a challenge — get physical.

The edict came after the Canadians surprised many at this summer’s Copa America tournament, making it through to the semifinals. As his players departed for their professional clubs, the head coach wanted them thinking about continued growth.

“I challenged them to be more physically present in the matches that they played in,” Marsch said. “I’ve tried to encourage all the players to sprint more, to win more duels, to win more balls, to be more dynamic in matches.”

When Canada reconvened for a pair of friendlies last week, the coach saw some players had already heeded his call, including Vancouver Whitecaps product Ali Ahmed.

The 23-year-old midfielder started in both Canada’s 2-1 victory over the United States on Saturday and Tuesday’s 0-0 draw against Mexico.

“I’m really happy for him,” Marsch said. “I think he’s still young and still has a lot of room and potential to continue to grow.”

Playing under Marsch — who took over as head coach in May — has been a boon for the young athlete, currently in his second full season with Major League Soccer’s Whitecaps.

“Jesse has a very clear way of playing,” Ahmed said. “And I think the way we’ve been training and the way we’ve been growing as a group, it’s been helpful for me.”

The reward of getting minutes for a national team can spur a player’s growth, including Ahmed, said Whitecaps head coach Vanni Sartini.

“Of course that fuels him inside to say ‘Hey, I want to be a better player. I want to get to that stage,'” said Sartini.

Vancouver had six players — including Ahmed — away on international duty during its 0-0 draw against Dallas FC on Saturday. The absences are a good problem to have, Sartini said.

“Because we have players that are close to the national team, we have a lot of players that development is faster, better, bigger than it would have been if they hadn’t been called,” he said.

Born in Toronto, Ahmed came up through the Whitecaps’ academy system and played for Vancouver’s MLS Next Pro side before cementing his spot on the first team in 2023. He put up two goals and two assists across 22 regular-season games, and added another goal and another helper in 19 appearances this year.

Taking the next step will require the five-foot-11, 154-pound Ahmed to push himself physically, Marsch said.

“Tactically, he’s technically gifted,” the coach said. “I’ve told him he’s got to get in the gym more.

“There’s a lot of these little things where too many guys, they still look like kids and we need to help them look like men and play like men. And that’s what the high standards of the game are about.”

Marsch has quickly adjusted to recalibrating standards in his short time with Team Canada. Since taking over the squad in May, the coach said he’s learned the players are smarter and more capable than he originally thought, which forces the coach to constantly recalibrate his standards.

“That’s my job right now, to keep raising the level of the demands,” he said.

The way 40th-ranked Canada is viewed on the international stage is evolving, too.

“I think we’re changing the perception on the way we’re playing now,” he said. “I think beating the U.S. — it would have been nice to beat Mexico as well — the way we did, the way that we performed at Copa, I think teams are starting to look at us differently.

“Right now, I think we’re focused on ourselves. We’re definitely trying to be the best in CONCACAF and we have higher goals as well.”

This report by The Canadian Press was first published Sept. 12, 2024.



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Lawyer says Chinese doping case handled ‘reasonably’ but calls WADA’s lack of action “curious”

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An investigator gave the World Anti-Doping Agency a pass on its handling of the inflammatory case involving Chinese swimmers, but not without hammering away at the “curious” nature of WADA’s “silence” after examining Chinese actions that did not follow rules designed to safeguard global sports.

WADA on Thursday released the full decision from Eric Cottier, the Swiss investigator it appointed to analyze its handling of the case involving the 23 Chinese swimmers who remained eligible despite testing positive for performance enhancers in 2021.

In echoing wording from an interim report issued earlier this summer, Cottier said it was “reasonable” that WADA chose not to appeal the Chinese anti-doping agency’s explanation that the positives came from contamination.

“Taking into consideration the particularities of the case, (WADA) appears … to have acted in accordance with the rules it has itself laid out for anti-doping organizations,” Cottier wrote.

But peppered throughout his granular, 56-page analysis of the case was evidence and reminders of how WADA disregarded some of China’s violations of anti-doping protocols. Cottier concluded this happened more for the sake of expediency than to show favoritism toward the Chinese.

“In retrospect at least, the Agency’s silence is curious, in the face of a procedure that does not respect the fundamental rules, and its lack of reaction is surprising,” Cottier wrote of WADA’s lack of fealty to the world anti-doping code.

Travis Tygart, the CEO of the U.S. Anti-Doping Agency and one of WADA’s fiercest critics, latched onto this dynamic, saying Cottier’s information “clearly shows that China did not follow the rules, and that WADA management did nothing about it.”

One of the chief complaints over the handling of this case was that neither WADA nor the Chinese gave any public notice upon learning of the positive tests for the banned heart medication Temozolomide, known as TMZ.

The athletes also were largely kept in the dark and the burden to prove their innocence was taken up by Chinese authorities, not the athletes themselves, which runs counter to what the rulebook demands.

Despite the criticisms, WADA generally welcomed the report.

“Above all, (Cottier) reiterated that WADA showed no bias towards China and that its decision not to appeal the cases was reasonable based on the evidence,” WADA director general Olivier Niggli said. “There are however certainly lessons to be learned by WADA and others from this situation.”

Tygart said “this report validates our concerns and only raises new questions that must be answered.”

Cottier expanded on doubts WADA’s own chief scientist, Olivier Rabin, had expressed over the Chinese contamination theory — snippets of which were introduced in the interim report. Rabin was wary of the idea that “a few micrograms” of TMZ found in the kitchen at the hotel where the swimmers stayed could be enough to cause the group contamination.

“Since he was not in a position to exclude the scenario of contamination with solid evidence, he saw no other solution than to accept it, even if he continued to have doubts about the reality of contamination as described by the Chinese authorities,” Cottier wrote.

Though recommendations for changes had been expected in the report, Cottier made none, instead referring to several comments he’d made earlier in the report.

Key among them were his misgivings that a case this big was largely handled in private — a breach of custom, if not the rules themselves — both while China was investigating and after the file had been forwarded to WADA. Not until the New York Times and German broadcaster ARD reported on the positives were any details revealed.

“At the very least, the extraordinary nature of the case (23 swimmers, including top-class athletes, 28 positive tests out of 60 for a banned substance of therapeutic origin, etc.), could have led to coordinated and concerted reflection within the Agency, culminating in a formal and clearly expressed decision to take no action,” the report said.

WADA’s executive committee established a working group to address two more of Cottier’s criticisms — the first involving what he said was essentially WADA’s sloppy recordkeeping and lack of formal protocol, especially in cases this complex; and the second a need to better flesh out rules for complex cases involving group contamination.

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AP Summer Olympics:



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