Lululemon Shares Drop After Chief Product Officer Departs

Lululemon

Lululemon Athletica Inc. (NASDAQ:LULU) shares dropped 4.6% in premarket trading after the company announced its Chief Product Officer, Sun Choe, is leaving, sparking concerns among analysts that the athleisure brand might be losing its competitive edge.

Lululemon stated that Choe will not be replaced. Instead, as part of a larger organizational reorganization, Choe’s responsibilities for product design will be transferred to Jonathan Cheung, the company’s Global Creative Director.

The exit of Choe adds to the “wall of worry” in the near term, according to Raymond James analyst Rick Patel.

Other analysts viewed the departure as an indicator of potential further sales weakness. Barclays analyst Adrienne Yih described the resignation as an “incrementally negative data point,” suggesting that changes in the company’s product lineup to attract more customers could “take longer to course-correct than initially thought.”

Lululemon’s stock had fallen 37% this year through Tuesday’s close, while the S&P 500 Index  was up 12%. Some of the company’s most popular products, including its belt bag, are losing their appeal, while competition has intensified as other fashion retailers expand their athletic apparel offerings. The company has also struggled with inventory management issues, which have impacted profits.

As Lululemon prepares to report its first-quarter earnings on June 5, analysts are expecting a 6.6% increase in comparable-store sales, a rare single-digit sales increase for the company.

Featured Image: Wikipedia

 Please See Disclaimer