“I’ve been in the sporting goods business for a long time and what I find is, in good times people love to have recreation time and in bad times they need stress reduction, and so exercise, healthy living and stress reduction probably will leave us a little bit recession-proof.”

Paul Waldie: Well that was Lululemon CEO Robert Meers when he spoke with us last Fall. That was on why he thinks the company is safe in the event of a U.S. recession. For more on whether Lululemon can withstand a worst-case economic scenario south of the border, we’re joined by Rick Wolfe. He’s president of PostStone Corporation. Well Rick, you heard that from Robert Meers back in November when he was here. What do you think, I mean Lululemon should be vulnerable, they’re at the high end of the retail market, if a recession comes isn’t that the first part of the market that gets hurt?

Rick Wolfe: It has already been hurt. Companies like Tiffany are reporting at lower results. I think that because of where they are in their growth curve there isn’t a worst case for Lululemon. Will they have to cut back their growth? Yes, but will there be disaster in store for them? I wouldn’t think so.

PW: Now they are on an ambitious growth track in the U.S., right? A hundred plus stores as I recall, and they only have about 40 or something now. Can they really go ahead with that now given a) the potential recession in the U.S. and b) the credit crunch that’s plaguing all companies across the U.S. right now?

RW: They probably can, and if they’re going to do it they’re going to need to exercise great care. The reason I say that they probably can is that at the very same time as the consumer’s wallet is going to be a bit thinner, the landlord is going to be more and more eager for a bright new tenant. There will be much less pressure on the best spaces and that can be a tremendous opportunity for Lululemon.

PW: What about in Canada, they haven’t talked a lot about growth in Canada. I gather the focus has been largely on the U.S. Do they have more opportunity to grow in Canada in terms of stores and that?

RW: I would think they do. That was a great piece from Malcolm Knapp on Starbucks [who you interviewed just now], and the issues that Starbucks faces today are ones that Lululemon’s going to have to make sure don’t happen to them.

PW: And yet they keep poaching executives from Starbucks to run them. They’ve just hired what’s her name, Christine Day I think her name is, to be a very senior person in heading up the U.S. expansion. They seem to rely on Starbucks a lot.

RW: And the former CFO of Starbucks is on their board. Where Starbucks was 15 years ago is a terrific template for Lululemon. I’m a huge admirer of Starbucks and yet on BNN’s Stars and Dogs I’ve said they’re a dog today. They’re not a dog for their story, they’re a dog for going too far. With luck, Christine Day will bring the history and Robert Meers will make sure they don’t go too far.

PW: What about Chip Wilson, where do you see his role? He of course is the founder of Lululemon, he’s been the brains behind this, but Robert Meers is very much the day-to-day guy. How are they working together and where do you see Wilson’s role in the company going forward?

RW: You get the sense that he is the carrier of the flame, the one whose job it is to make sure that the culture stays pure, that staff in every store are clear on the founder’s stories. Corporate narrative is important for every business, for this business it’s absolutely essential.

PW: And they don’t run the risk of just being a fad item? You know, fashion is going to change and tastes are going to change and I guess that’s one of the big challenges facing them as well, obviously.

RW: Yes, I mean we wouldn’t want to see them turn into Krispy Kreme, now would we? You know, yes they do run the risk of turning into a fad. Let’s hope that the management team has already started to role-play that out and starts to think about the product lines that need to come in if yoga isn’t what people think it is.

PW: OK, we’ll have to leave it there, thanks so much for joining us.

RW: My pleasure

PW: That’s Rick Wolfe, he’s president of PostStone Corporation.