Yoga Pants Recall: Are Lululemon's Revealing Yoga Pants Causing Company Stock to Sink? [PHOTOS & REPORT]

By Elle Fure March 19, 2013 2:50 PM EDT
Lululemon's form-fitting yoga pants have been recalled due to an unacceptable
Lululemon's form-fitting yoga pants have been recalled due to an unacceptable "level of sheerness."(photo:Reuters)

Why have Lululemon’s revealing yoga pants been recalled?

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The Vancouver-based Lululemon - which learned over the weekend that its black yoga pants were deemed too sheer for distribution - announced late Monday that it had recalled the popular workout-wear from stores and e-commerce sites. Now, the flimsy fabric of Lululemon’s yoga pants is causing the company’s stock to plummet.

Lululemon’s yoga pants are produced in Taiwan and Vietman, and made from a mix of nylon and Lycra spandex fibers. According to the retailer’s website, Lululemon hasn’t made any changes in manufacturing since 2004, and is currently investigating how a set of skimpy yoga pants managed to reach stores earlier this month. In an effort to excuse the incident, the company assured consumers that “the ingredients, weight and longevity qualities of the women’s black Luon bottoms remain the same.” The workout wear retailer also acknowledged that the faulty fabrics “fall short of our very high standards.”

Lululemon’s supplier, however, refutes the company’s claim that the unacceptable “level of sheerness” was a result of a mishap in the manufacturing process. In fact, the Taiwanese supplier, Eclat Textile Co Ltd., maintains the fault did not lie with the material, but, rather, with the Canadian company’s understanding of consumer tastes. According to New York Daily News, Roger Lo, a spokesperson for Eclat, insists that “we did follow their instructions to make the product.” The problem for the sheer situation, Lo maintains, stemmed from “a gap between Lululemon’s expectations and reaction from the market.”

Lululemon's revealing yoga pants are causing both company stock and consumer confidence to sink. (photo:Reuters)
Lululemon's revealing yoga pants are causing both company stock and consumer confidence to sink. (photo:Reuters)

After the recall of the sheer yoga pants, Lululemon has offered affected consumers not just an apology, but also a full refund or exchange. The recalled pants, however, comprise approximately 17% of the company’s in-store stock. As a result, Lululemon executives are warning customers that they may encounter a shortage of black yoga pants.

But a yoga pants shortage could be the least of the Canadian company’s worries. Indeed, as Lululemon acknowledged, the “issue will have a significant impact” on the company's financials. And, sure enough, in today’s trading, Lululemon stock fell as low as 5.9%. Shares of Eclat also fell 1.6% in Taipei.

Lululemon’s recalled yoga pants mark the fourth time the company has faced quality control issues this past year. Should further recalls be required, it may not be just the company’s stock sales that will drop. According to Credit Suisse analyst Christian Buss, Lululemon also “risks alienating its core customer base.”

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