Lululemon could face a class action lawsuit

Lululemon might be in hot water after a legal firm from Newtown, Pennsylvania, has announced that it’s looking for a lead plaintiff in a pending class action lawsuit against the Vancouver company. 

The firm, Edelson Lechtzin, is alleging that the technical athletic apparel-maker committed securities fraud. It suggests that during the period of December 7, 2023, and July 24, 2024, Lululemon “made materially false and/or misleading statements about its business, operations, and prospects.” Those who bought stock during this period are eligible to join the pending lawsuit. 

In its legal complaint, Edelson Lechtzin says that Lululemon failed to disclose to investors that the company was struggling with issues with its inventory allocation and colour palette execution, that its “Breezethrough” product launch underperformed, and that the company was experiencing stagnating sales in the Americas region.

More specifically, the complaint alleges that on March 21, after the market closed, Lululemon issued a press release announcing its financial results for the fourth quarter and full year ending January 28, 2024, revealing the company’s growth was slowing in the Americas region. On this news, Lululemon’s share price fell $75.65, or 15.80 percent, to close at $403.19 per share on March 22.

It continues that on July 24, Bloomberg reported that analysts suggested Lululemon’s inventory allocation seemed inconsistent, particularly regarding the Breezethrough leggings launched earlier that month. As a result, the company’s stock price fell $9.31, or 3.3 percent, to close at $272.06 per share on July 24. (Vancouver Tech Journal could not locate that article, though similar claims are made in an article published the following day.)

The complaint concludes that on July 25, before the market opened, Bloomberg reported that a Lululemon spokesperson told the agency that the company made the decision to pause on sales of the Breezethrough yoga wear “to make any adjustments necessary to deliver the best possible product experience.” On this news, Lululemon’s share price fell $24.74, or 9.09 percent, to close at $247.32 per share on July 25.

The complaint argues that as a result of the athleisure giant’s “wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.”

Lululemon’s stock is down 52.13 percent year-to-date, with its most significant fall occurring between March 22 and 23.

Lululemon did not return a request to comment by this story’s publication deadline.

No class has been certified at this time, and no allegations have been proven in court.

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