LA JOLLA, Calif. – Lululemon Athletica Inc.’s problem isn’t just that a batch of its black yoga pants were made too sheer and had to be recalled – the popular retailer is now downgrading its financial predictions and watching its stock do a downward dog.
The Vancouver, B.C., company said late Monday that it pulled the women’s pants from its stores and e-commerce sites over the weekend after learning that the material was too revealing. The Luon fabric is produced in Vietnam and Taiwan and made with a mix of nylon and Lycra spandex fibers.
Magdalena Patterson is a Yoga instructor at La Jolla Yoga Center. She said 90 percent of the people who attend their Power Yoga class wear the popular, high-end line of clothes.
“We all went, ‘oh my God, something is wrong with those clothes? We love those clothes.'” said Patterson, who admits she owns about a hundred pieces of Lululemon clothing.
In a lengthy FAQ posted on its website, the chain said it was still investigating how a batch of too-skimpy pants was allowed to reach stores in early March. Lululemon hasn’t changed its manufacturers or ingredient quality since 2004, it said.
Or, in the company’s words: “The ingredients, weight and longevity qualities of the women’s black Luon bottoms remain the same but the coverage does not, resulting in a level of sheerness in some of our women’s black Luon bottoms that fall short of our very high standards.”
Vicky Hillman, who does yoga at the La Jolla Yoga Center she was also surprised by the recall, because she’s will to drop a $100 on a pair of workout pants is the care that goes into making them.
Lululemon is now offering affected customers full refunds or exchanges while also warning of an impending shortage of black yoga pants. The recalled apparel makes up 17% of the women’s pants and crop pants Lululemon sells in stores.
But it’s more than practitioners’ poses being affected – Lululemon said the “issue will have a significant impact” on its financials.
The company lowered its expectations for an 11% increase in same-store sales and revenue between $350 million and $355 million for its first fiscal quarter. Now, Lululemon is projecting a 5% to 8% same-store sales range and revenue between $333 million and $343 million.
The company will unveil its fourth quarter and full-year earnings on Thursday. But already, analyst Sam Poser of Sterne, Agee & Leach downgraded Lululemon’s shares to a neutral rating from buy, telling investors to back off until quality-control concerns are alleviated.
Lululemon had been riding a recent surge in demand for women’s athletic wear, along with competitors such as Gap Inc.’s Athleta, Under Armour Inc. and even mass-market retailers such as Forever 21 and Victoria’s Secret.
In early morning trading, Lululemon stock fell as much as 5.9%; as of 9:15 PDT, it was down $3.60, or 5.5%, to $62.30
But both Patterson and Hillman they can see through the transparency of this quality glitch and will “absolutely” continue to shop at Lululemon.
—— LA Times writer Tiffany HSY contributed to this story.