Sheer Madness

Lululemon’s Reports Profit Increases In Midst of Sheer Scandal

On Monday, Lululemon recalled an entire production run of its ‘Luon’ black yoga pants on account of accidental sheerness. The recall reflected 17 percent of pants on the brand’s store shelves. But just days after the recall, Lululemon has delivered a remarkably positive fourth quarter earnings report.

The report outlines a double-digit increase in the company’s net income, which grew 48.8 percent to $109.4 million, up from $73.5 million last year, reports WWD. Revenues were up too, expanding 30.7 percent to $485.5 million from $371.5 million in 2012. But while the increases reflect a massive growth, they do not include repercussions of March’s sheer-gate, since fourth quarter earnings closed on February 3.

Lululemon told WWD that it's expecting a minor dip in first quarter earnings which would reflect all ‘Luon’ losses and additional overhead costs. The brand also says that the recall will result in $12 to $17 million of lost revenues.

However positive, this fourth quarter report seems in no way indicative of the brand’s approaching annual report. Lululemon says it's expecting around $57 to $67 million in lost revenues in the first half of the year.