Lululemon Product Chief to Step Down After Pants Recall

Lululemon Athletica Inc., the yoga-wear maker that last month recalled shipments of women’s pants for being too sheer, said Chief Product Officer Sheree Waterson is stepping down.

Waterson, who had been with the company since 2008, will leave on April 15, the Vancouver-based company said yesterday in a statement. The company said in a separate release that it was restructuring its internal product organization.

Lululemon has been probing how the shipments of pants that didn’t meet its standards -- they became too sheer when wearers bent over -- passed through its testing procedures. The recall of the black Luon pants, which accounted for about 17 percent of all the women’s pants it sells, caused the company to forecast profit this year that was less than analysts estimated, sending the shares to the biggest drop in two months.

The company said yesterday that while the fabric, a combination of nylon and Lycra spandex fibers, met the low end of its standards, the company’s testing protocols were incomplete. Lululemon said it also was assessing all of its Luon garments that are in production and stationing company employees in factories to monitor manufacturing.

The company reiterated the March 21 profit forecast that it gave when it announced the pants would be removed from shelves.

Lululemon rose 1.2 percent to $65 at 9:40 a.m. in New York. The shares had dropped 16 percent this year through the close of regular trading yesterday, compared with an 8.9 percent gain for the Standard & Poor’s 500 Index.

Full Refunds

Lululemon is offering full refunds or exchanges to customers who bought the defective pants after March 1. Luon is manufactured in Vietnam and Taiwan, according to the company’s website.

The pants recall has been a challenge for the retailer, which has been able to sell $98 yoga pants and $64 tank tops because of its carefully cultivated reputation for quality. The chain also faced problems with bleeding garments last year, which it apologized for through a letter on its Facebook page in July.

Lululemon, with more than 200 locations, has been expanding into men’s and girls’ active-wear and opening more stores internationally.

(Updates share price in sixth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE