Lululemon's Sheer Behinds Move Markets

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Lululemon Athletica Inc. announced yesterday that it has had to pull about 17 percent of women's pants from its stores because a batch of its black Luon bottoms showed a little too much skin. Cue the bad jokes about buns, downward dogs and bottom lines.

That last one isn't so funny for the Vancouver-based company. By the close of trading today in New York, the stock was down 16 percent this year. The company's shares fell more than 5 percent this morning. Lululemon has revised its estimate for its current quarter revenue, $343 million, down from as much as $355 million.

Meanwhile, the company is assuring customers that it's trying to get to the bottom (oops) of the matter. It will have its famous stretchy pants back on shelves as soon as possible, lest any chaos ensue. The "Black Luon Pants Shortage Expected-FAQ" posted on its website explains: "We are working closely with our manufacturing partner to understand what happened during the period this specific fabric was made."

On the other side of the issue, and the world, Reuters reports that Taiwanese Lululemon supplier Eclat Textile "said it had followed Lulu's specifications for the pants, and that the retailer had apparently misjudged customer tastes." Roger Lo, Eclat's chief financial officer, told the Wall Street Journal: "All the pants were manufactured according to the requirements set out in the contract with Lululemon." Lululemon says its sourcing manager for raw materials "is currently at Eclat's facilities in Taiwan." But Eclat's message to Lululemon seems clear: You got what you asked for.

Alas, we stumble upon the existential problem lying beneath (yikes) this financial and athletic crisis: How much transparency are we really seeking?

Indeed, while the black Luon pants have been pulled from the shelves, other lightly-colored bottoms sell on the company's website with the disclaimer: "You may experience sheerness with some of our bright-coloured bottoms because of the lightweight nature of the fabric. We recommend you do a couple of Down Dogs in your bright-coloured bottoms to ensure you're happy with the fit and coverage."

This may be one topic on which to refrain from advocating for more transparency. Stay tuned for more coverage.

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Zara Kessler at