Lululemon stock falls on sheer yoga pant recall

Shares of Lululemon Athletica sank in premarket trade on Tuesday after the popular yoga-wear retailer said it expects to take a “significant” financial hit as a result of an expected shortage of its signature black “luon” women’s yoga pants.

The Vancouver-based retailer said after the market close on Monday it pulled long and cropped versions of the pant from its shelves because the product didn't meet its technical specifications. The pants were pulled from stores, showrooms and the e-commerce site, representing some 17 per cent of all women’s bottoms.

"The ingredients, weight and longevity qualities of the pants remain the same but the coverage does not," Lululemon said in a statement. That factor has resulted "in a level of sheerness in some of our women’s black Luon bottoms" that falls short of its standards, it added.

The company stressed it has used the same manufacturing partner on key fabrics since 2004, and the event is "not the result of changing manufacturers or quality of ingredients."

Lululemon said the issue is expected to have a significant impact on its financial results. It estimated comparable store sales growth of 5 to 8 per cent in the first quarter, down from the 11 per cent it had expected up to March 17.

Customers who bought the pants after March 1 can return them for a full refund or exchange, the company said.

Shares of Lululemon were down some 5 per cent in premarket trade on Tuesday.