Dallas, Texas 04/02/2014 (FINANCIALSTRENDS) – Lululemon Athletica inc. (NASDAQ:LULU) has seen two rough years in a row due to poor brand management and supply chain follies. The yoga clothes retailer, that earned bad name for bad yoga pants in 2012 has been fighting against the double edged sword of sluggish demand and sluggish supply. Seeing at how business has been trending for Lululemon, the management is up for a redo from scratch all cross its footprint, from product assortment to supply chain and growth beyond the current business model through e-Commerce incursions.
On one side, consumer churn is slow for its weakening band image and push for quality is taking toll on supply line efficiency. Speaking of efficiency at that level in global retailer, there is one thing called information tech, which has helped Wal-Mart grow into an unbeatable cost leader. Could it save Lululemon from disastrous years ahead, too? Maybe, but not alone!
Lulu has it share of Business Model Follies
Global cost leader in the industry like Wal-Mart Stores, Inc. (NYSE:WMT) have developed their multibillion dollar businesses by expanding their networks of business partnerships and leveraging on innovative technologies for inventory management, procurement function and supply chain management while Lululemon relied on select few Suppliers. It lacks the convenience effect that Wal-Mart has to offer, also there is a dying out brand image. The company has share price down by almost 16% while earnings miss are becoming an everyday reality.
Turnaround Hinges on another Supply-Chain Resurrection
In 2010 when Lululemon Athletica inc. (NASDAQ:LULU)’s business of yoga inspired athletic wear line started to show sluggish growth the company resorted to Viatech Business Group Inc to implement the VoCollect voice technology for inventory management. Soon after that move the company saw its profits upbeat by at least triple the pre-implementation time, finally peaking the best quarterly earnings in June 2010. However, this time around, the problem is even worse as the brand is losing face amid quality hullabaloos.