Daily Updates

March 19, 2013

See-through yoga pants a pain for Lululemon

NEW YORK — Lululemon has yanked its popular black yoga pants from store shelves and online after it found that the sheer material used was revealing too much of its loyal customers.

The see-through yoga garb is the latest in a series of quality glitches that threaten to alienate the retailer’s hardcore fan base, which has so far been more than willing to shell out $100 for pants and other athletic garments. These legions of followers have helped Lululemon, founded in 1998, become a billion dollar business.

Eva Glettner, 33, of Los Angeles is a case in point. Glettner, who has been a devoted fan of Lululemon, said she’ll now shop only at Target to buy her yoga outfits.

“You expect a certain quality, and they definitely let me down,” Glettner said. “For that price point, it’s unacceptable.”

Glettner says Target has similar pants for $30. “It’s hard enough making a commitment to working out without worrying about whether you are baring your behind.”

Lululemon Athletica Inc. said on its website that it first began to understand the extent of the problem on March 11 as part of its weekly call with store managers, who voiced worries about sheerness. Lululemon declined to respond to Associated Press queries about whether the problem was discovered when customers started to return the Luon pants, the latest batch of which went on sale at the beginning of the month.

But Faye Landes, an analyst at Cowen & Co., believes customers reported the problem to store managers, who in turn reported back to management.

“If this is indeed the case, we suspect a serious lapse in (the company’s) supply chain, quality control and vendor management and specifically in its quality assurance program,” she said.

Lululemon insists that it hadn’t changed the specifications for the clothing or switched suppliers, but is warning that the recall could lead to short supplies and will hurt its first-quarter revenue. The Luon pants, made from a combination of nylon and Lycra fibers, are one of the retailer’s product staples and account for about 17 percent of all women’s pants in its stores. The company is offering customers’ full refunds or exchanges.

The debacle marks the fourth quality problem in the last year for Lululemon, according to Credit Suisse analyst Christian Buss — and not the first see-through issue.

First, the Vancouver-based company had sheerness problems with certain swimsuits for spring 2012. And some light-colored pants currently on sale carry this disclaimer: “You may experience sheerness with some of our bright coloured bottoms because of the lightweight nature of the fabric. We recommend you do a couple of Down Dogs in your brightly coloured bottoms to ensure you’re happy with the fit and coverage.” “Down Dogs” refers to a yoga position. The company also has had problems with bright dyes bleeding.

Investors usually like transparency, but in this case they’re the exception. Lululemon’s stock price dropped nearly 3 percent in trading Tuesday to $64.08. The stock is down 16 percent in the year to date while the broader markets have been hitting multiyear highs.

Until now, Lululemon has been as much a star for investors as it has for yoga devotees. Its shares rocketed from less than $3 in 2009, to around $65 this year. Analysts expect to get more details when Lululemon posts earnings for the final quarter and full fiscal year on Thursday. But already some Wall Street analysts have downgraded the stock.

“We see some potential that (Lululemon) risks alienating its core customer bases should quality control issues persist,” Buss wrote in her note. Based on her own research, Buss said the Luon fabric is sourced from a Taiwanese manufacturer.  

Lululemon confirmed through an outside publicist that its sourcing manager for raw materials is at the facilities of the supplier, Taiwan-based Eclat Textile Co.

Still, some marketing experts dismissed the debacle as a temporary glitch and said Lululemon’s loyal customers won’t switch to rivals like Nike Inc. or Champion anytime soon.

“It’s a late-night TV joke, and it’s going to pass,” said Robert Passikoff, president of Brand Keys Inc., a New York customer research firm. “The issue is closure, contrition and care. Clearly, they’re doing everything they need to do.”

Lululemon cut its first-quarter revenue forecast as a result of its decision to withdraw the pants. The company now anticipates first-quarter revenue between $333 million and $343 million, down from an earlier estimate of $350 million to $355 million. Analysts polled by FactSet had previously forecast revenue of $352.1 million.

The company also slashed its outlook for first-quarter revenue growth at stores open at least a year to between 5 percent and 8 percent, from 11 percent previously.

1
Text Only
Daily Updates
  • Afghan hospital guard kills 3 American doctors

    An Afghan government security guard opened fire Thursday on a group of foreign doctors at a Kabul hospital, killing three American physicians and wounding a U.S. nurse, officials said.

    April 24, 2014

  • Nevada rancher condemned for racist remarks

     A Nevada rancher who has become a conservative folk hero for resisting the federal government’s attempts to round up his cattle faced sharp criticism Thursday for racist comments published in a New York Times article.

    April 24, 2014

  • NRA seeks universal gun law at national meeting

    With concealed weapons now legal in all 50 states, the National Rifle Association’s focus at this week’s annual meeting is less about enacting additional state protections than on making sure the permits already issued still apply when the gun owners travel across the country.

    April 24, 2014

  • 10 Things to Know for Thursday

    Your daily look at late-breaking news, upcoming events and the stories that will be talked about Thursday.

    April 23, 2014

  • In Other News, April 23

    April 23, 2014

  • US weighs clemency for inmates jailed for 10 years

    The Justice Department is encouraging nonviolent federal inmates who have behaved in prison, have no significant criminal history and have already served more than 10 years behind bars to apply for clemency, officials announced Wednesday.

    April 23, 2014

  • High court tosses $3.4M award to child porn victim

    The Supreme Court on Wednesday rejected a plea to make it easier for victims of child pornography to collect money from people who view their images online, throwing out a nearly $3.4 million judgment in favor of a woman whose childhood rape has been widely seen on the Internet. Two dissenting justices said Congress should change the law to benefit victims.

    April 23, 2014

  • Airport security vulnerabilities not uncommon

    For all the tens of billions of dollars that the nation has spent on screening passengers and their bags, few airports made a comparable investment to secure the airplanes themselves.

    April 23, 2014

  • Deal signs bill expanding gun rights in Georgia

    Gov. Nathan Deal has signed legislation expanding where people with licenses to carry can bring their guns in Georgia.

    April 23, 2014

  • Indian film awards arrive in Tampa, Fla., but why?

    The so-called Bollywood Oscars have been held in Macau, Singapore, London — and now, Tampa?

    April 23, 2014

AP Video