Blog: Lululemon caught out by fabric recall

Petah Marian | 25 March 2013

US activewear brand Lululemon suffered an embarrassing and costly error last week after it had to recall black trousers made with its Luon fabric after discovering they were sheerer than expected.

This is not the first product quality issue the brand has faced over the past year, leading some industry watchers to question the brand's quality control process. Lululemon said the move may cost it up to US$20m in sales during the second quarter.

Yet these issues have yet to hit the company's bottom line, with Lululemon reporting a 48.7% increase in net income on Thursday (21 March) to reach $109.4m.

Sourcing giant Li & Fung saw full year profits slump on the back of ongoing restructuring costs and weakness in its distribution business. Core operating profit tumbled 42% to US$511m, while net profit was down 9.4% to $617m. Revenue, however, was up 1% to $20.22bn.

H&M also posted a decline in profits, with net earnings falling 10.2% to SEK2.4bn (US$370m) over the first quarter. The world's second largest clothing retailer blamed the declines on weaker than expected sales due to poor weather in much of Europe and North America.

The company also announced plans to release its list of supplier factories as part of efforts to promote transparency across its business. The list covers 95% of its total production volume.

PVH has begun to consolidate its Warnaco operations following its acquisition of the company last month. It revealed that it will make between 900-1,000 staff redundant and close Warnaco's offices in Florence, Italy, as well as those in Duncansville and Huntingdon in Pennsylvania, with further redundancies in its New York City, Milford, Connecticut, Hong Kong and other Far East locations.

Meanwhile, French luxury group PPR has revealed plans to change its name to Kering as it works to position itself as a luxury and sportswear business. The company said the new name, pronounced as "caring" in English, expresses its culture of taking care of its brand, people, stakeholders and the environment. 

Burma faces some serious challenges if it is to develop a first-class garment exporting industry, David Birnbaum wrote following a visit to the country. He said that not one of the factories visited would meet minimum standards of compliance, with the employment of underage children, excessive overtime and seven-day working weeks. 




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