Lululemon Athletica revealed Monday that it expects earnings to drop this quarter due to a dud batch of its popular yoga pants made with its proprietary luon fabric, which its store managers indicated were being returned by customers who found them too sheer for wearing. “Some of our bottoms were made with a batch of black luon that doesn’t meet our standards so we’ve pulled them from our floors and our website.” 

After being downgraded by Credit Suisse and others after the news, an earnings call today meant to detail the company's fourth quarter and full year 2012 results along with 2013 developments such as a move into golf and tennis apparel was instead taken up with answering analysts' questions about how it was handling the crisis—and offering more (ahem) transparency about the situation than has been offered to customers.Continue reading...

Is this a sign of things to come for Canada's retail darling? Lululemon, the Vancouver-based lifestyle brand and highly successful global retailer, over the weekend pulled its Luon black yoga pants from store shelves after discovering the sheer material was just too sheer, a result, some say, of poor quality control on the company's part. On Monday, the retailer announced it would be pulling various—but unnamed—styles of its popular (and pricey) yoga pants, explaining, “Some of our bottoms were made with a batch of black luon that doesn’t meet our standards so we’ve pulled them from our floors and our website.”

“At lululemon, our most important relationship is with our communities and our guests. We recently learned some information about some product that arrived in our stores and we wanted you to know right away,” according to the retailer's blog post. “We are working with our supplier to replace this fabric and other manufacturers to replenish the affected core items as fast as we can. What that means is there will be a shortage of these styles in our stores and online until our new stock arrives. We are also in conversation with our manufacturing partner to understand what happened during the period this fabric was made.”

The brand said it will offer refunds or exchanges to customers who bought the affected item in March, either online or in stores. Lululemon—which was just named Canada's top retail brand by Interbrand's 2013 Best Retail Brands report—is known for turning around products on short order. "Our guest knows that there's a limited supply, and it creates these fanatical shoppers," CEO Christine Day, a former Starbucks executive, told the Wall Street Journal. But the reported pants issue isn't a calculated sales strategy to boost demand and drive sales.Continue reading...

Toyota may be on the rise again in the U.S. market, but it still can't get the floor-pedal thing right.

The automaker has just been ordered to pay a record fine of $17.35 million for failing to report a safety defect to the U.S. government in a timely manner, the U.S. Department of Transportation said. The fine is a record civil penalty for a single violation and the maximum that the federal government can assess.

And the thing is, the fine relates to the same troubled region of its automobiles — the intersection between floor mats and floor pedals — that was behind Toyota's catastrophic unintended-acceleration problems in 2010 and the company's payment of nearly $50 million in total fines for reporting violations on sticking gas pedals and some other matters.Continue reading...

It might be a stretch to say that Toyota didn't see this coming. But Toyota Motor executives are likely stunned by how quickly the brand's latest recall fiasco has affected the standing of the once-sterling Toyota marque, at least in the minds of some consumers. And soon it could affect the breakneck pace of Toyota's sales bounce-back in the U.S. this year.

Last week, Toyota announced a recall affecting 7.4 million vehicles worldwide, the biggest number seen in the auto industry in 16 years. The recall is to correct faulty electric-window switches that could catch on fire, but Toyota had reported no accidents or injuries as a result of this problem.

Presumably because this "massive Toyota recall" of 2012 sounds too much like the "massive Toyota recall" of 2010 not to mention subsequent recalls, consumer perception of Toyota's brand "has plummeted" according to YouGov BrandIndex research. Its score slumped badly over the last few days and now occupies the bottom in a chart of 32 car brands tracked by the service, down from sixth place just a week earlier.Continue reading...

Just as Toyota seemed to be in the clear again after a couple of years of recovery from major problems, some external and some self-imposed, the brand finds itself back in a thicket of major problems — some from outside and some from inside the company.

The slump in sales in Japan because of a geopolitical spat, and now news of a massive new recall of 7.4 million vehicles by Toyota, have created major speed bumps in the way of Toyota's global sales recovery. After its unintended-acceleration recall fiasco of 2010 and natural disasters that wreaked havoc with its supply chain last year along with smaller recalls, Toyota was forging a smoother path in 2012 with major new models, rising sales, and recaptured market share.

This new recall involves 7.4 million vehicles globally, including 2.5 million cars and light trucks sold in the U.S., due to a potential fire hazard involving power-window switches. The "glitch on a world-wide scale ... evokes the company's much-publicized quality woes of two years ago," the Wall Street Journal noted. That's exactly the kind of assessment, and prospects, that Toyota can't afford right now as it puts together its solid comeback in 2012.Continue reading...

Ford has been putting "real people" in many of its ads for a while now, including the "Swap Your Ride" subjects hobnobbing with Mike Rowe and the actual Ford owners who were peppered with questions by fake reporters in the brand's controversial staged press conference stunt.

Now positioning their own workers as real people, the brand's marketers are now putting put actual Ford employees into ads promoting the 2013 Ford Escape crossover-utility vehicle. The campaign aims to show how Ford's people are demonstrating their internal drive to "Go Further," the tagline centerpiece of Ford's new global brand positioning. Ford also is launching a new web-only video comedy series behind the nameplate as well.

"We don't have a blanket strategy now to always do real people in ads, but in a lot of cases we're finding it does work," Scott Kelly, Ford's communications manager, told brandchannel. "We look at it campaign by campaign. Where it does work, it's all about being as authentic as possible."Continue reading...

Fast-food giants share a not-so-secret recipe: make the up sell, adding fries to your bill or talking you into some kind of combination meal.

But the up sell isn’t working quite the way it used to. Consumers aren’t asking for "the #5 with fries" anywhere near as much as they used to, Fortune reports. A study by NPD Group finds that sales of combo meals at fast-food restaurants have gone down 12% in the last five years.

That means a billion fewer combo meals were ordered in the five-year period ending this past January than were ordered up in the five years before that. The lousy economy has something to do with it, but the study also showed that consumers would like to have more options in their combos.

The grand-daddy of the combo meal is the Happy Meal, which has been holding on for dear life. Revamped in time for the London Summer Olympics healthier menu marketing, it's been hit in markets such as Chile, where the government is now prohibiting restaurants (but it might as well say "McDonald's") from including toys with meals.Continue reading...

Recall all that pre-launch marketing that Ford so carefullly laid for the 2013 Escape? The branded entertainment experiment that was the Escape Routes prime-time TV series on NBC; the Spanish-language TV commercial during the NBA Finals featuring the Miami Heat; and, in its latest promotional stunt, measuring the model's interior in ping-pong balls (56,778, in case you were wondering).

Well, Ford may need all of the interest and goodwill generated by those marketing gambits, and a lot more, to get past the fact that the automaker just announced the second recall in as many weeks for the crucial new version of its venerable SUV. It also raises the issue that when it comes to brand recalls, customers do recall recalls, as Toyota found out the hard way.Continue reading...