Investors See Right Through Lululemon (LULU)

Lululemon (NASDAQ: LULU) is pulling its signature yoga pants from its stores’ shelves. As a result, the company’s investors are losing their shirts.

LULU shares are down 5% in early trading today on embarrassing news that the yoga-apparel company had to pull some of its popular Luon bottoms because the manufacturer made them too see-through. The pants had been in Lululemon stores since March 1, and the company is offering refunds to anyone who bought them. It’s the second recall the company has had to make in the last year.

Today’s losses extend a rough beginning to the year for Lululemon. Shares were already down 11% year-to-date entering the day.

Even though the see-through pants have only been in stores for less than three weeks, the recall affects 17% of the pants they had in stock and will reduce first-quarter sales by anywhere from $12 million to $22 million. Lululemon’s profits have improved each of the last two quarters.

Meanwhile, the company that reportedly supplied the faulty yoga pants – Taiwan-based Eclat Textile – has seen its shares decline 4.6% in the past two days on the Taiwan exchange.

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