Lululemon's see-through yoga pants get yanked

A manufacturing defect results in an unacceptable 'level of sheerness' -- and a recall that will create shortages of the popular women's apparel.

By Jonathan Berr Mar 19, 2013 9:54AM
File photo of Groove pants on display at the Union Square Lululemon retail store in New York, on Sept. 15, 2010 (© Benjamin Norman/Bloomberg via Getty Images)Shares of Lululemon (LULU) were falling this morning after the maker of trendy athletic apparel announced it pulled its iconic black yoga workout pants for women off the shelves. The problem is a manufacturing defect that resulted "in a level of sheerness" that was unacceptable in its Luon pants.

This is a big deal, affecting 17% of all the women's pants sold in Lululemon's stores, and it will have a "significant impact" on financial results, which are set to be released Thursday. Lululemon says it will release more details about the recall at that time.

Not surprisingly, Lululemon slashed its earnings outlook. The company now expects comparable-store sales, a key retail metric measuring performance at stores open at least a year, to gain 5% to 8% in the first quarter, down from an earlier forecast of 11% on a constant-currency basis. Revenue is expected to be $333 million to $343 million, versus an earlier estimate of $350 million to $355 million. Wall Street analysts had forecast sales of $353.66 million.

This represents a rare misstep for Lululemon, whose shares have surged more than 380% over the past five years, fueled by the surging popularity of yoga. Wall Street thinks the stock hasn't found its happy place yet. The average 52-week price target on it is $79.29, more than 20% higher than where it currently trades.

Lululemon CEO Christine Day issued a profuse apology for the mishap, saying in a press release: "We will accept nothing less than the very highest quality we are known for." Among the companies likely to exploit the situation are competitors like Nike (NKE) and Under Armour (UA).

Lululemon isn't sure how the problem occurred because it has used the same manufacturer for its signature fabric since 2004. Customers who purchased black Luon pants after March 1 are welcome to return them for a full refund or exchange. But those looking for Lululemon's popular apparel now may find the pants in short supply, the company says.

Whether this snafu will hurt Lululemon's brand over the long run remains to be seen, but the company is clearly convinced that seeing too much of the customers wearing the defective pants is worse.
 
Jonathan Berr isn't sure whether his chakras are in alignment, but he doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.  

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234Comments
Mar 19, 2013 2:33PM
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This thread is useless without pics......
Mar 19, 2013 2:26PM
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I've never before heard of Lululemon yoga pants ("clearly" I am out of touch)!
The "sheer" audacity of all this leads me to conclude that it is nothing more than a rather "transparent", "thinly veiled" publicity stunt intended to get them some free national "exposure". I feel confident that most everyone will be able to "see right through it all"! In the meantime, in an effort to get with the times, I am going to run out the store, TODAY! ...and pick up some right, proper pants to wear so that I will be smartly attired the next time I eat a yoga...red ones for strawberry, blue for blueberry, and boy for boysenberry! ...Ta-ta!

Mar 19, 2013 11:41AM
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Surprised the sales didn't sky rocket.

 

Mar 19, 2013 2:51PM
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I'm going to do a little investigating. I'm going to hit the gyms. I'll be getting behind the situation and be offering my support. I'll bend over backwards to get the job done.  I'll be looking very closely at the evidence. I'm on the scene. 10-4.

Mar 19, 2013 2:29PM
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I'm sure the Kardashians would buy them.  Although they might not be shear enough for them.
Mar 19, 2013 2:18PM
Mar 19, 2013 1:31PM
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Solution 1: panties
Solution 2: sell them all to LiLo

Mar 19, 2013 2:41PM
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whats wrong with seeing alittle camel toe lol

Mar 19, 2013 2:39PM
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They missed a perfect opportunity to sell them through Frederick's of Hollywood, Hustler, etc.

Mar 19, 2013 2:27PM
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Never heard of this brand.  Sounds like this could be a marketing trick as even bad news gets attention. 
Mar 19, 2013 2:40PM
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Just do the "superman trick" and wear some undies on the outside of the pants.  Who knows?!?... maybe that will start a new trend!

Mar 19, 2013 2:56PM
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They stated the fact they they are "popular"...why pull them?? Obviously the people wearing them don't care what is showing if they are selling like hot cakes...who knows, maybe they are selling better because they ARE revealing!
Mar 19, 2013 4:31PM
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This store sells workout clothes that cost more than leather.  Seriously like $120 workout jackets and $90 pants.  The people at my gym live with their parents yet they wear a $250 outfit to sweat in.  And we wonder why everyone is in credit card debt.  hmmmmmmm
Mar 19, 2013 3:10PM
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I'm so tired of the yoga pants look. Unless you're going to the gym to work out or lounging around the house, don't wear them! The problem with fashion trends is they end up in in the grade schools populous. I'm sickened that the middle and high schools allow the volley ball shorts that look like they are literally wearing underwear. I get it ladies, you're a sexual person....everyone is...you don't have to flaunt yourselves 24/7.
Mar 19, 2013 2:48PM
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See, this is why I don't work out!  ;)

Mar 19, 2013 2:46PM
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There used to be one of their stores near mine in Highland Village Tx and I enjoyed the Saturday morning yoga classes they did outside (watching, not doing) but the store closed down, which was surprising because the area has a lot of money but, the clothing was WAY over-priced.
Mar 19, 2013 2:38PM
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Good!! I am so tired of seeing camel toe and butt wedgie while I am shopping! I really wish some women would wear a shirt big enough to cover all that just because you can put them on don't mean that you need to wear them. IJS!!!
Mar 19, 2013 3:10PM
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Boy you said it about the over exposure of camel toe and butt wedgie...I mean, good god, some of these women have a gaddam sinkhole for a kooch!
Mar 19, 2013 2:51PM
Mar 19, 2013 3:01PM
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What are the hookers going to wear now?
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