Weighing the Good and the Bad of Lululemon Athletica inc. (LULU)’s Latest Mishap

The good

For all the bad news surrounding the company, it seems Lululemon Athletica inc. (NASDAQ:LULU) made the best out of a bad situation.

For one, the media attention of such a salacious story increased its brand recognition. While Lululemon may be well known among the more affluent clientele of sunny states, it’s still far from ubiquitous with yoga pants. The story gives consumers everywhere a glimpse at the brand image Lululemon has cultivated over the years – attractive people wear our clothing.

Furthermore, by getting out ahead of the story quickly and controlling it, Lululemon is showing that quality is still its main focus. The message is these pants do not meet our high quality standards instead of Lululemon is making lower quality pants. In the long run, this open communication builds customers trust.

This compares favorably to a recent PR moves from another high-quality vendor – Apple Inc. (NASDAQ:AAPL). When Apple released its new mapping service for iOS 6 in September, it faced a bevy of backlash from media sources citing customer complaints regarding lack of clarity and accuracy. In response, Apple effectively told customers it knows people don’t like it, but stick with it, and it’ll get better. To its credit, the app has gotten better–but releasing an inferior product, and then practically admitting the company knew it was inferior, was not its best PR move.

A buying opportunity

This isn’t the first setback the company has had in terms of its quality, and, in all likelihood, it won’t be its last. As an investor with a long-term outlook, I see this disruption as a buying opportunity.

RW Baird released the results of a survey on Monday suggesting that the recall “is not likely to permanently impair its sales trajectory.” While the company will certainly see a sales hit on its first quarter, which it’s already adjusted its outlook for, the long-term growth prospects still look strong. If the company’s handling of this PR story is an indication of how well it can execute its strategy – I believe it is – I want to get in on any major pullbacks in the stock price.

The article Weighing the Good and the Bad of Lululemon’s Latest Mishap originally appeared on Fool.com and is written by Adam Levy.

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