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Lululemon Withdraws Sheer Yoga Pants, Stock Drops

Monday, 18 Mar 2013 | 8:55 PM ET
Sarah L. Voisin | Washington Post | Getty Images

Lululemon Athletica is pulling shipments of unexpectedly sheer women's yoga pants from its stores, in a move the athletic clothing maker said would hurt its bottom line.

Shares of the Canadian company, known for its pricey women's workout gear, fell more than 6 percent after it said the move will "have a significant impact" on financial results and lead to a shortage of its signature black luon fabric yoga pants in its stores.

(Read More: See-Through Yoga Pants or Not, LULU Still a 'Buy': Pros)

Certain shipments of yoga pants that went on sale this month had an unacceptable "level of sheerness," and affected about 17 percent of all women's bottoms in its stores, Lululemon said.

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"The ingredients, weight and longevity qualities of the pants remain the same but the coverage does not," the Vancouver, British Columbia-based company said in a statement issued late on Monday.

The company, which is looking to expand beyond North America and Australia, said this weekend it withdrew all of the affected black yoga pants from its stores, showrooms and e-commerce site. Customers who bought the affected pants can return them for a full refund or exchange, it added.

Lululemon said it has used the same fabric manufacturer since 2004 and stressed that the issue was not caused by any change in manufacturers or quality of ingredients.

(Read More: Lululemon Has No Plans to Discount CEO)

Bottom Line Expected to Drop

Lululemon said it now expects fiscal first-quarter sales of $333 million to $343 million, down from a prior forecast of $350 million to $355 million. Comparable-store sales growth will also be affected.

The retailer estimated comparable store sales growth of 5 to 8 percent in the quarter, down from the 11 percent it had expected up to March 17.

The company said it is working to determine the impact on first-quarter earnings as well as the expected impact on its results for the rest of 2013.

(Read More: Lululemon CEO's Advice: Don't 'Wait to Be Anointed')

Lululemon said it will provide more details when it reports fiscal fourth-quarter results on March 21.

Shares of Lululemon fell $4.15 to $61.75 after ending 3.8 percent lower on Nasdaq.

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