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June 4, 2013

After tests, Lululemon yoga pants return to shelves

The Lululemon Athletica yoga pants that revealed more than muscle tone are back.

              

The company is restocking its Luon black yoga pants in stores and online after they were pulled in March for being too sheer, Lululemon said Monday on its website. It raised the standards for the Luon fabric and put the material through 15 tests of specific components including colorfastness and burst strength, the Vancouver-based company said in the statement.

              

Lululemon saw a surge in sales based on pent-up demand for the pants, which are central to the brand, Camilo Lyon, a New York-based analyst for Canaccord Genuity, said Monday.

              

"This is a core product of theirs," said Lyon. "They needed to make sure the communication with the consumer was perfect, and for the most part they did a good job."

              

The company disclosed March 18 that some of the Luon garments became too sheer when wearers bent over and offered full refunds or exchanges for pants purchased after March 1. The issue was a potential blow to the retailer, which can sell yoga pants for $98 and tank tops for $64 because of its carefully cultivated reputation for quality.

              

Customers can consult an "educator" to ensure their pants are the correct size and "perform the way they were intended," according to Monday's statement. Lululemon has adjusted the garment pattern to ensure the pants won't stretch beyond their ability.

              

"Maintaining the integrity of the style and fit is a big priority for us, and making sure that our guests are in the right size pant is an important part of the equation," Lululemon said.

              

The stock has gained 24 percent since the day after the recall was announced.

              

The retailer said it expects to lose $57 million to $67 million in sales from the recall. The recall of the black Luon garment, which accounted for about 17 percent of all women's pants the company sells, caused Lululemon to forecast profit this year that was less than analysts estimated, sending the shares to their biggest decline in two months.

              

The company reports first-quarter results June 10. Adjusted profit in the period will be about 30 cents per share, according to the average of 25 analysts' estimates compiled by Bloomberg.

              

"The incredible publicity from the media actually helped them - they spent exactly $0 on all that advertising," Lyon said. "What we saw was an uptick in traffic into the stores right around the recall. When you have more traffic in your stores, even if you don't have core pant in stock, chances are that that consumer is going to buy something else."

              

Lululemon, with more than 200 locations, is expanding into men's and girls' active-wear and opening more stores internationally.

            

 

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