According to the law firm press release, Lululemon sells yoga wear, including the Company’s most iconic product, the Luon yoga pants.
The complaint alleges that during the Class Period, defendants made false and misleading statements regarding the Company’s products and future business prospects. Specifically, according to the complaint, defendants failed to disclose the following adverse facts during the Class Period: (a) the quality defects in the Luon yoga pants, which were shipped on March 1, 2013 in a fabric that was very thin, overly translucent and essentially rendered the pant see-through, resulted in part from Lululemon’s efforts to cut costs in order to raise profit margins to the detriment of product quality and brand reputation; (b) Lululemon was being forced to sell its yoga pants at a discounted price during the Class Period to obtain sales and protect market share; and (c) there were serious discussions concerning defendant’s continued employment at the Company and the Company was considering replacing defendant. As a results of defendants’ positive Class Period statements, the price of Lululemon stock increased to $82.50 per share in intraday trading by June 10, 2013, allowing defendant to sell 2 million shares of his personally owned stock at artificially inflated prices for proceeds of more than $163 million.
Then, on June 10, 2013, after the close of trading, Lululemon issued a press release announcing its first quarter financial results and that defendant was stepping down as CEO as soon as her replacement could be selected. Defendants also stated that Lululemon had resorted to price discounting during the Class Period. The Company’s stock price plummeted on this news, closing down $14.43 per share, or more than 17.5%.
On October 1, 2013, a Memorandum Decision and Order appointed the Louisiana Sheriffs to serve as lead plaintiff in this action, with Bernstein Litowitz Berger & Grossmann LLP as lead counsel.
On April 18, 2014, the Court issued an opinion and order granting the defendants' motions to dismiss.