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Lululemon has much bigger problems than its Chairman’s gaffes

On the Internet, we've heard a lot about the unfortunate comments of one Chip Wilson, founder and chairman* of the yoga clothing empire Lululemon, who finally resigned after suggesting that some women's bodies "just don't actually work" for his lines of stretchy pants. And lo, Lululemon's stock took a tumble this morning after the company reported earnings this morning, responding to lower projected sales in the coming months. Commentators declared: Insult your customer base at your peril.

But wait: Were those two events necessarily related?

The almighty brand. (Kevork Djansezian/Getty Images)

After all, there's little evidence that Wilson's gaffe had any impact on sales. Revenue for the quarter were up by double digits, and comparable in-store sales increased a healthy 5 percent. Asked repeatedly about the impact of Wilson's comments, the company's chief financial officer, John Currie, said that although foot traffic was down slightly in stores, he had no evidence to suggest customers were responding specifically to what the ousted CEO said -- just that "it's realistic to assume that when there's negative press, that there's an impact on the business."

And let's face it, Lululemon has had some more serious PR problems over the years, most notably the recall of $60 million worth of excessively sheer pants, and that horrific murder in Bethesda. As for guidance about future sales -- which drove the stock dive -- the company is facing a lot more structural issues, like overall softness in the apparel sector, and competition from lower-cost retailers getting in on the yoga craze (Lululemon's stuff is as pricey as the category gets). Branding power is important, but for the masses, it's not really tied to what some CEO says.

"The statements probably don't have an effect on the average consumer walking through the doors," says Matthew Quint, director of Columbia Business School's Center for Global Brand Leadership. "With Lululemon as a brand, the CEO matters less, because he isn't associated with the brand in the way that Steve Jobs or Bill Gates are, where the brand they lead is integrally tied to the founder-CEO."

It's kind of like the negligible impact of gaffes in politics. As the Monkey Cage's John Sides pointed out, pundits talk a lot about candidates' verbal goofs, but they don't matter much when it comes time to vote -- at least, not nearly as much as fundamentals like how the economy is doing or whether the country's at war. The same is true about shopping. At the end of the day, you're buying the best quality thing at the lowest price, and on top of that you'll go with a brand that projects your chosen personal aesthetic.

That's the calculation that Abercrombie & Fitch made when it decided to keep its own gaffe-prone CEO: This is a guy who, while he might've slipped up and unwisely told the truth about the retailer's target audience, wasn't wrong about the image A&F has always sought to maintain. The board may have figured that media firestorms aren't all they're made out to be -- it's management that ultimately matters.

Not CEO.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.



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Brad Plumer · December 12, 2013

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