Lululemon warns pants recall due to "sheerness" will hurt sales in first quarter

VANCOUVER – Lululemon Athletica Inc. (TSX:LLL) said Tuesday a problem with the sheerness in the material used for a batch of its hip-hugging black Luon pants and crops has forced it to pull them from its shelves and will cut into sales.

The athletic clothing retailer said it has pulled all of the affected black Luon women’s bottoms from stores, showrooms and its website and is working with its supplier and other manufacturers to replace the fabric and replenish the inventory as quickly as possible.

“The ingredients, weight and longevity qualities of the pants remain the same but the coverage does not, resulting in a level of sheerness in some of our women’s black Luon bottoms that falls short of our very high standards,” the company said in a statement.

Lululemon estimated that the affected items represent approximately 17 per cent of all women’s bottoms in its stores, which will result in a shortage of the affected styles.

The company said the affected pants were available in its stores beginning on March 1.

Shoppers who bought black Luon pants after that date, either online or in stores, are welcome to return the defective pants, the Vancouver-based company said.

“We regret any inconvenience this has caused for our guests,” Lululemon CEO Christine Day said in a statement.

“It is always our first priority to protect the quality of our fabrics that keep our guest so loyal to our products. We will accept nothing less than the very highest quality we are known for.”

Up to March 17, Lululemon says it was on track for a comparable-store sales increase of 11 per cent on a constant dollar basis and revenue in a range of $350 million to $355 million for the first quarter of the year.

Lululemon now expects comparable-store sales to be up five to eight per cent and revenue in a range of $333 million to $343 million.

The company is expected to release its fourth-quarter results on Thursday.

Keeping store shelves filled has been a problem for Lululemon in the past.

In 2011, the company launched an initiative to boost its inventories to meet the growing demand of shoppers.

Shares in Lululemon, which announced the problems after the close of markets, were down $2.31 at $67.50 on the Toronto Stock Exchange.