NEW YORK (AP) -- Lululemon has yanked its popular black yoga pants from store shelves and online after it found that the sheer material used was revealing too much of its loyal customers.
The see-through yoga garb is the latest in a series of quality glitches that threatens to alienate customers who have given clothing seller a fanatical following willing to shell out $100 for the pants.
Lululemon Athletica Inc. insisted it had not changed the specifications for the clothing or switched suppliers, but is warning the problems could lead to short supplies. The pants account for about 17 percent of all women's pants in its stores.
Lululemon, which disclosed some of the details on its company website, is offering full refunds or exchanges. Eva Glettner, 33, of Los Angeles is a case in point.
Glettner, who had been a devoted fan of Lululemon, said she'll now shop only at Target to buy her yoga outfits.
"You expect a certain quality, and they definitely let me down," Glettner said. "For that price point, it's unacceptable." Glettner says Target has similar pants for $30.
"It's hard enough making a commitment to working out without worrying about whether you are baring your behind." Lululemon said on its website that it first began to understand the extent of the problem on March 11 as part of its weekly call with store managers, who voiced worries about sheerness.
Lululemon didn't immediately respond to Associated Press queries about whether the problem was discovered when customers started to return the pants. But Faye Landes, an analyst at Cowen & Co., believes customers reported the problem to store managers, who in turn reported back to management.
"If this is indeed the case, we suspect a serious lapse in (the company's) supply chain, quality control and vendor management and specifically in its quality assurance program," she said.
The debacle marks the fourth quality problem in the last year for Lululemon, according to Christian Buss, an analyst at Credit Suisse -- and not the first see-through issue. First, the company had certain swimsuits for spring 2012 with sheerness problems.
The company also had problems with bright dyes bleeding. Some other, light-colored pants now on sale are now being offered with a disclaimer about their sheerness.
For earlier cases of sheerness, Lululemon attached a disclaimer to the clothing. "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 brightly coloured bottoms to ensure you're happy with the fit and coverage." "Down Dogs" refers to a yoga position. Investors usually like transparency, but in this case they made an exception.
Lululemon's stock price dropped more than 5 percent in trading Tuesday. Until now, Lululemon has been as much a star for investors as it has for yoga devotees. Its shares rocketed from less than $3 in 2009, to around $65 this year.
Analysts expect to get more details when Lululemon posts earnings for the final quarter and full year on Thursday. But already some Wall Street analysts started to downgrade the stock.
"We see some potential that (Lululemon) risks alienating its core customer bases should quality control issues persist," wrote Buss in her note. Still, some marketing experts dismissed the debacle as a temporary glitch and said its loyal customers wouldn't switch to rivals like Nike or Champion anytime soon.
"It's a late-night TV joke, and it's going to pass," said Robert Passikoff, president of Brand Keys Inc., a New York customer research firm. "The issue is closure, contrition and care. Clearly, they're doing everything they need to do." The Luon pants are one of the retailer's product staples.
Luon is made from a combination of nylon and Lycra fibers. Buss said that based on her own research, Luon is sourced from a Taiwanese manufacturer. Lululemon cut its first-quarter revenue forecast as a result of its decision to withdraw the pants. The company now anticipates first-quarter revenue between $333 million and $343 million. Its prior guidance was for $350 million to $355 million.
Analysts polled by FactSet had previously expected revenue of $352.1 million. It also lowered its first-quarter outlook for increase in revenue at stores open at least a year, from 11 percent, to between 5 percent and 8 percent. Its shares dropped $3.30, or 5 percent, to $62.60 in trading Tuesday.
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