Lululemon Athletica (LULU) has an image problem. On March 18 the Canadian athletic apparel company recalled 17 percent of its stretchy black yoga pants after store managers raised concerns that the material was too thin—so thin, the pants were inadvertently see-through.
It’s hard to tell anything’s wrong with the pants while you’re standing up, but striking a yoga pose or stretch-ing before a run, the issue—and your underwear, or lack thereof—reveals itself. In a press release, Lululemon says the problem is the nylon-and-lycra-blend fabric it calls Luon, which is in its Wunder Unders pants ($72-$98), Skinny Will leggings ($98), and Astro Pant ($98). “The only way to test for the problem is to put the pants on and bend over,” Chief Executive Officer Christine Day said in a conference call.
Lululemon is offering full refunds for the pants and has pulled the affected styles made after March 1 because that’s what’s available in stores, as the company notes. It blames the defective batch on a Taiwanese supplier, Eclat Textile, which denies it’s in the wrong. “All shipments to Lululemon went through a certification process, which Lululemon had approved,” Roger Lo, Eclat’s chief financial officer, told the Wall Street Journal. So how long have the leggings been this risqué?
“My husband’s a personal trainer, and he first noticed it two years ago,” says Rachel Harper, executive director of a community fitness program in Montague, Prince Edward Island. At the time, Harper’s husband, Matt, worked at an elite fitness center in Winnipeg, Manitoba. “A lot of women weren’t wearing underwear under their Lulus, and it was really disturbing,” Harper says. She contacted Lululemon but says the company never responded. “I think of it now as my personal mission. I pull women aside at the gym and say, ‘Um, do you realize—?’ They’re always shocked.”
The gaffe could cost Lululemon an estimated $60 million and stunt its popularity. In the past five years, the company has tripled its annual revenue, expanding from 70 stores to more than 200 as women across North America scrambled to buy its colorful, form-fitting clothes. There are Lululemon review blogs, Lululemon fan sites—there’s even an invite-only Facebook (FB) group for women who want to resell their used clothes. “I know women who have $10,000 or $20,000 worth of Lulu in their closets,” says Carolyn Beauchesne, who runs the blog Lululemon Addict. Beauchesne says that about two years ago she noticed the company’s clothing felt thinner and pilled more quickly. “I do have one pair of pants that, if I bend over, you can see my underwear,” she says. “But I don’t do yoga, so I figure I’m safe.”
This isn’t Lululemon’s first product glitch. In 2007 a New York Times investigation revealed that the company’s Vitasea line of seaweed fabric—which it claimed released “marine amino acids, minerals, and vitamins into the skin”—contained no seaweed at all. (Lululemon took the health claims off its labels but still sells Vitasea clothes; shirts cost $68.) Reports of bleeding colors have also plagued the company, and in 2010 it pulled its reusable shopping bags after they were found to contain lead. Last year, Lululemon withdrew a line of swimwear that became see-through when wet.
If Lululemon’s lucky, this recall will put an end to its transparency headache. Either way, it’s a good reminder to always do a downward dog in the dressing room mirror. “I was driving down the street the other day, and I saw a woman wearing Lululemon pants on the sidewalk while pushing a baby stroller,” says Harper. “She bent over to do something to the baby, and she ended up showing everyone—well, let’s just say it was gross.”