There's a "Clear" Problem at Lululemon

Lululemon Athletica Inc., the luxury yoga-wear company, with yoga pants ranging from $70-$100 a pair has been an unexpected success story during these economics times creating a massive cult following among fitness and health minded consumers.  These crazed consumers turned a yoga lifestyle-brand company into now a billion-dollar yoga/fitness wear empire.

For a while, it seemed that Lululemon could do no wrong for investors and consumers alike. However, on Monday Lululemon admitted to a snag in its supply-chain as its popular pants have fielded complaints for being too sheer and the yoga company was forced to pull their signature pants from store shelves.  

Lululemon blamed the problem on its supplier, a Taiwanese company, Eclat Textile Co. stating that they had not manufactured the product according to specifications.  The supplier immediately defended itself in an interview with WSJ:

"All shipments to Lululemon went through a certification process which Lululemon had approved," Eclat Chief Financial Officer Roger Lo said. "All the pants were manufactured according to the requirements set out in the contract with Lululemon."

The fabric in question which is produced by Eclat called "Luon" is used in almost all Lululemon products from pants to headbands. Luon, which is trademarked by the brand, is 86 percent nylon and 14 percent Lycra. What makes Luon so special is that the fabric is preshrunk, stretches, and wicks away sweat from your body as you exercise.

Lululemon shares (LULU) fell on Tuesday as the market took in the recall news.  The pants represent 17% of women's pants in stores and Lulu-lovers should expect shortage in the meantime. 

Read More:

WSJ: Yoga-Pants Supplier Says Lululemon Stretches Truth

WSJ: Lululemon Yoga Pants Pulled From Stores for 'Sheerness'

USA Today: Lululemon lovers buy into healthy lifestyle