Lululemon Athletica said it is implausible to believe it intended to sell hundreds of thousands of nearly sheer yoga pants and hope consumers wouldn't notice, and that a securities fraud lawsuit claiming it did just that should be thrown out.
In a Wednesday night filing in the U.S. District Court in Manhattan, Lululemon and Chief Executive Christine Day said the company "disclosed in real time'' its efforts to recall and fix women's black yoga pants containing luon fabric, after learning that the pants suffered from sheerness when wearers bent over.
Shareholders accused Lululemon of hiding the defects, using deep discounting to boost market share, and concealing plans to replace Day. Her planned exit was announced on June 10 and led to a 17.5 percent drop in the Vancouver, British Columbia-based athletic wear company's share price the next day.
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But Lululemon said shareholders failed to show the stock drop was tied to the defect, efforts to address it including through a March recall, Day's departure, or the company's "general'' statements reflecting its commitment to quality.
Lululemon also said it did not hope the defect "would remain undiscovered'' if consumers wore the pants as intended.