THE investor relations page of lululemon athletica’s website proclaims that “friends are more important than money”, which gives you an idea of what the Canadian manufacturer of yoga wear is about. Lululemon was one of the earlier consumer brands to latch on to the idea that the way to prosper is to link itself to a wider “purpose”, in this case self improvement. Staff at its nearly 250 shops, mostly in North America, festoon the walls with accounts of their life goals.
Lululemon’s Zen-like indifference to money turned out to be a good way to make a lot of it. Founded in 1998, it now has a market capitalisation of around $10 billion. Last year sales at its American stores averaged more than $2,000 per square foot, one of the highest rates in retailing. The formula has attracted imitators, including Gap, a big fashion retailer, which added its Athleta brand in 2009 to pursue lululemon’s yogic clientele with lower prices and a more-generous returns policy.
Lululemon has had a bit of trouble living up to the angelic expectations it has raised. One problem has been that the firm’s founder, Chip Wilson, is given to saying silly things. He once claimed he picked the firm’s name because the Japanese couldn’t pronounce it (the official version is that it was chosen from a survey of 100 people). In 2011 the company came out with a bag with the legend “Who is John Galt?”, the first line of Ayn Rand’s "Atlas Shrugged". Not all the women who buy into lululemon’s self-improvement creed have Rand’s fondness for the Übermensch.
More embarrassing were quality control problems. In March it recalled a line of yoga trousers that were not just form fitting but unintentionally transparent. This, like someone performing a "downward facing dog" pose, put it an awkward position: it is expected to cost between $45-50m in sales. In November some customers complained about pilling on another variety of trousers. Mr Wilson made matters worse by suggesting that it was the women who were built wrong (he later apologised).
Mr Wilson will no longer be a distraction. Earlier this month he resigned as non-executive chairman. This coincides with a change of chief executives: Christine Day will leave at the end of the fiscal year in January after five years on the job. The new boss will be Laurent Potdevin. He looks well suited to the task of capitalising on lululemon’s strengths while fixing its glitches. His last job was running Toms Shoes, which has a more altruistic notion of purpose: it gives away a pair of shoes to a poor child for every one it sells. Expect less Ayn Rand and more Mother Teresa.
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