Lululemon’s share price is down 16% in 2014.
The company has been hit by a string of quality control and customer service issues. These problems blew the door wide open for competitors like Nike and Under Armour.
And despite having a new CEO and strategy, Lululemon’s problems are far from over, said Brian Sozzi, chief equities strategist at Belus Capital Advisors.
“There is explosive growth occurring for offerings from Nike and Under Armour that is higher quality and more versatile, for lower prices, than at Lululemon,” Sozzi said, adding that Lululemon might have to start selling cheaper products to connect with customers.
Web traffic is also exploding at Nike and Under Armour, while Lululemon’s growth is slowing, Sozzi said.
Lululemon is also not capitalising on incorporating technology into its clothing, a trend illustrated by the popularity of Nike’s FuelBand.
“Although a premium player in the athleticwear market, Lululemon is not immune to rising style choices with improved quality by competitors,” Sozzi said.
In order to succeed, Lululemon is going to have to commit to quality or lower its prices.
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