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The EconomistLululemon, a Canadian clothing firm, rides the yoga boom
Don't mention the seaweed
IF THERE is no seaweed in a T-shirt, does it still reduce stress and make your skin feel softer? That was the worry that threatened to distract North America's yoga practitioners from their routines last month. Shares in Lululemon Athletica, a Canadian firm that sells yoga clothing and equipment, fell after news reports claimed that tests had failed to find any trace of seaweed fibre in some of its garments, which were supposed to contain the stuff. Lululemon insisted that its own test results showed seaweed really was present, though it agreed (at the request of Canadian regulators) to withdraw unsubstantiated claims about its supposed therapeutic benefits.
None of this appears to have affected the devotion of Lululemon's fanatical customers, of which there are many. Yoga Journal, a magazine, estimated in 2005 that about 17m Americans practise yoga, spending about $3 billion a year in the process—$500m of it on clothing. “This is one of the best growth stories in retail,” says Paul Lejuez, an analyst at Credit Suisse. Lululemon, with sales of $66m in the most recent quarter, is by far the most visible brand. “If you're going to call anything a yoga pure-play, this is the one,” says Mr Lejuez.
Lululemon's share price shot up after its initial public offering in July. At its peak in October, the company was worth $4 billion. Rivals including Victoria's Secret, American Eagle and Nike have moved into yoga gear lately. But Lululemon thinks it has a winning formula. It designs its own products and sells nearly all of them through its own shops, which it styles as centres for local yoga groups, enlisting popular yoga teachers as “ambassadors”, and hosting classes and other events.
Bob Meers, the chief executive, likens Lululemon's position to that of Reebok (which he also headed) in the early 1980s. That firm capitalised on an earlier fitness fad—aerobics—to develop a global sporting-goods brand. “We are at 10% of our potential right now,” says Mr Meers. Though it affected the firm's share price for a fortnight, the seaweed brouhaha did not affect sales, he says. Among customers used to vague claims about chakras and crystals, a little seaweed seems to go a long way.