Lululemon rejects allegation it misled shareholders
By Jonathan Stempel
NEW YORK Feb 19 (Reuters) - Lululemon Athletica Inc says its nearly year-long struggle with bad publicity linked to slowing growth and a messy product recall did not reflect any corporate intent to defraud shareholders, and that an expanded lawsuit suggesting otherwise should be thrown out of court.
In a filing on Tuesday night in the U.S. District Court in Manhattan, the Canadian yoga wear retailer said it promptly addressed quality control problems as they became apparent, and updated investors in real time about the impact.
It acknowledged that comments in November by founder and Chairman Dennis "Chip" Wilson that some women's body shapes "just actually don't work" with Lululemon yoga pants prompted much negative press.
But it said none of this meant it owes shareholders money.
"While all of this makes for interesting reading," the company said, "it does not constitute securities fraud."
Lululemon is seeking to dismiss an amended lawsuit accusing it of misleading and defrauding shareholders between Sept. 7, 2012 and Jan. 10, 2014, just before shares of the company fell to a two-year low after the company issued its second lowered earnings forecast in a month.
Hannah Ross, a partner at Bernstein Litowitz Berger & Grossmann, which represents investors led by the Louisiana Sheriffs' Pension & Relief Fund, declined to comment on the filing. The fund is based in Baton Rouge, Louisiana.
Shareholders accused Lululemon of hiding defects in its black luon pants, which were recalled; concealing its inability to address quality shortfalls; using deep discounting to boost market share, and concealing plans to replace Christine Day as chief executive. Continued...