Lululemon: “The Seaweed Scandal” Appears To Be Over

Fear not Lululemon (LULU) lovers – and shareholders – the controversy that will forever be known as “the seaweed scandal” looks like it is over.

The cult-like following of the yoga apparel retailer does not appear to be in jeopardy now that the company has agreed to cooperate with the Competition Bureau to remove reference to therapeutic and performance claims on labels of its clothing with VitaSea fabric sold in Canada, according to Blackmont Capital analyst Barbara Gray.

The voluntary relabeling will also be done in other markets, while a review of all the claims on product tags will also be done. Ms. Gray said the related costs will likely be immaterial since only 3% of Lululemon Athletica Inc.’s products are involved.

She noted its sales of C$247 million, average price of C$60 per item, and expectations that only 124,000 items will need to be relabeled.

Ms. Gray continues to rate the shares a “hold” with a US$41.50 price target.