Shares of Lululemon are down today.
Yesterday, management said there would be a shortage of yoga pants for sale after some pants didn't meet the company's standards.
Specifically, those pants were a bit too see-through.
Here's an intra-day look at the stock via Yahoo Finance:
SEE ALSO: MORGAN STANLEY: These 20 Stocks Will Do Awesome For Years >
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Lululemon recalled 17 percent of its famous yoga pants for being too transparent.
The product defect is expected to hurt Lululemon's reputation in the short-term. If women are paying $98 for yoga pants, they expect quality.
But the pants shortage could also cause longer-term problems, hurting the brand's value and sending customers to competitors.
CEO Christine Day has said that the company relies on a low-inventory model. This creates the illusion of scarcity and allows Lululemon to sell 95 percent of its product at full price.
Lululemon's customers are notorious for their fanacticism. They cite the brand's great selection and quality for reasons why they shell out for the brand.
But demand for the pants is already high, and now there is 17 percent less product.
That means that customers could line up for yoga pants at Lululemon, and be unable to buy them, putting the company in a troubling position.
Competition is rampant, with Athleta, Nordstrom, and Under Armour all investing heavily in providing the best work-out gear for women.
These companies offer very similar products for a cheaper price. None have had product blunders such as Lululemon's most recent one.
If the experience of shopping at Athleta or Nordstrom becomes better, women are going to go there instead.
Investors are also wary of Lululemon's future. Quality was paramount at the company, and this snafu raises questions about its long-term growth abilities.
Lululemon has apologized, and says it's taken steps to amend the error.
But it will have to work twice as hard to gain back customers it lost.
SEE ALSO: You Really Do Have To 'Drink The Kool-Aid' To Succeed At Lululemon >
Lululemon's recall of its sought-after yoga pants — because they're sheer enough to become see-through— isn't the first weird event in the company's history.
Lululemon's story is just one weird chapter after another.
Did you know the company took its name because the founder believed Japanese people wouldn't be able to pronounce it?
Or that the company once claimed falsely that its pants were made with seaweed?
The pants recall is, in fact, serious business for Lululemon. Luon pants represent 17 percent of the chain's entire stock; they're $98 a pair and revenue growth at the company was already slowing before the recall was announced.
The screw up came a little more than a year after founder Chip Wilson stepped aside to be replaced as CEO by Christine Day.
Late in 2011, the company began printing the phrase "Who is John Galt?" on its shopping bags. Galt, of course, is the star of Rand's "objectivist" novel, "Atlas Shrugged," which argues that the naked pursuit of self-interest should be society's highest ambition. Founder Chip Wilson read the book when he was 18.
Here's what Wilson says of his company's origins:
"Women’s lives changed immediately [after the pill]. ... Men did not know how to relate to the new female. Thus came the era of divorces.
"With divorce and publicity around equality, women in the 1970′s/80′s found themselves operating as “Power Women.” The media convinced women that they could win at home and be a man’s equal in the business world. Women put in 12 hour work days, attempted to keep a clean and orderly house, and give their children all the love they had pre-divorce. What they gave up however was their social life, exercise, balance, and sleep.
"The 1980′s gave way to Power Women dressing like men in boardroom attire with big shoulder pads. They went to 3 martini lunches and smoked because this is what their “successful” fathers did in the business world.
"Breast cancer also came into prominence in the 1990’s. I suggest this was due to the number of cigarette-smoking Power Women who were on the pill (initial concentrations of hormones in the pill were very high) and taking on the stress previously left to men in the working world.
"Ultimately, Lululemon was formed because female education levels, breast cancer, yoga/athletics and the desire to dress feminine came together all at one time."
He told Canada's National Post Business Magazine, "It's funny to watch them try and say it," when asked about his views on the Japanese pronunciation of the company's name.
In 2009, he wrote:
It was thought that a Japanese marketing firm would not try to create a North American sounding brand with the letter “L” because the sound does not exist in Japanese phonetics. By including an “L” in the name it was thought the Japanese consumer would find the name innately North American and authentic.
In essence, the name “lululemon” has no roots and means nothing other than it has 3 “L’s” in it. Nothing more and nothing less.
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Lululemon announced Monday that it was recalling black luon yoga pants deemed too see-through. They made up 17 percent of all women's bottoms at Lululemon.
The apparel retailer blamed the problem on its supplier.
"The ingredients, weight and longevity qualities of the women’s black luon bottoms remain the same but the coverage does not, resulting in a level of sheerness in some of our women’s black luon bottoms that fall short of our very high standards," the company stated.
Now, the supplier has fired back.
Eclat Textile Co. of Taiwan said that the Lululemon yoga pants that it shipped were not "problematic,"according to The Wall Street Journal.
"All shipments to Lululemon went through a certification process which Lululemon had approved," Eclat Textile CFO Roger Lo told The WSJ. "All the pants were manufactured according to the requirements set out in the contract with Lululemon."
Lo also said tha Lululemon hasn't contacted Eclat since the incident.
Lululemon said that it expects the recall to have a "significant" impact on its financials this quarter.
SEE ALSO: What It's Like To Work At Lululemon >
Some of Lululemon's biggest fans are calling for the CEO's firing after the retailer announced it was recalling some pants for being too transparent.
Carolyn Beauchesne, author of the blog Lululemon Addict, claimed in a post that Day "ruined" her favorite brand.
Beauchesne's blog is a gathering place for women who want to review and discuss the yoga gear. She once told us that she's spent a total of $15,000 shopping there.
Responding to the see-through pants scandal, Beauchesne explained why many fans of the retailer don't like the CEO:
"Day has ruined everything special about lululemon. The bullet proof quality, the fit, the femininity, the lululemoness of the product," Beauchesne writes. "She is a one-trick pony who grew the company through expansion."
Day replaced Lululemon founder Chip Wilson in 2007. Before that, she was an executive at Starbucks.
The transparent pants, which resulted in a recall of 17 percent of product, are the fourth quality-control issue that Lululemon has had this year.
Many of Beauchesne's commenters appeared to support her vendetta against Day.
"I had more faith in Chip Wilson to appoint someone with a like-minded vision for the company," one commenter wrote. "I'm surprised that he fell for her-she provided short-term eye candy for the investors, but look where it has taken her in the long run."
"I do not think Day should stay on, but not all of the blame falls on her," wrote another commenter. "The head of product/manufacturing and head of design must be replaced. Whoever allowed that shoddy fabric, construction and design should be shown the door, stat. They clearly don't understand the brand or the vision."
One commenter claimed that customers have been complaining about sheer pants for more than a year.
"I am desperate to find a replacement brand," wrote another commenter. "I purchase online, but was recently in a Lulu store...the jackets were mostly short and ugly."
One of Lululemon's greatest strengths is its customers, whom Day once called "fanatical."
With even the biggest supporters turning on the brand, Lululemon will have to work fast to beat the mounting competition.
Another popular blogger, who goes by Lulumum, criticized Day's expansion strategy.
"I think it's time the board take a very serious look at what the cost of such quick expansion really is, because you are losing us here," Lulumum wrote. "And you are losing integrity while you are at it."
SEE ALSO: You Really Do Have To 'Drink The Kool-Aid' To Succeed At Lululemon >
Lululemon announced this week that it had recalled its black Luon yoga pants because they're too see-through. That particular item makes up 17 percent of all women's bottoms sold at the apparel retailer.
The pants are made of luon, a primary fabric found in most of Lululemon's performance wear products, from yoga pants to headbands.
Luon, which is trademarked by the brand, is 86 percent nylon and 14 percent Lycra. It's an important part of Lululemon's secret sauce.
So, what's so special about it? Why are customers willing to fork out $98 for a pair of luon yoga pants?
To start, the fabric is preshrunk, stretchy, and wicks away moisture from your body when you sweat.
The Lycra ensures that the fabric will never "stretch or bag out," while the nylon provides coverage.
Lululemon's Luon pants are made by Eclat Textile Co. in Taiwan, the same supplier that Lululemon has used for the past decade.
There are also a bunch of variations of luon that Lululemon uses, like brushed luon, reversible luon, and heathered luon. They're all trademarked too, and Lululemon assures that these variations "all have the same performance characteristics" as the regular version, though they may feel a bit different.
Lululemon is far from the only brand in performance-wear with its own fancy-named fabric. Trademarked fabrics are common in the athletic apparel industry.
Gap's Athleta calls the fabric for its yoga pants "Pilayo," which is a nylon/spandex blend. Under Armour's fabric, made from polyester/elastane, is called "StudioLux."
While it's still unclear what went wrong with Lululemon's transparent pants, the luon fabric will continue to be an important part of the brand.
Stop it! Everyone stop it right now!
Lululemon puns are totally out of control.
For those still unfamiliar with what happened with the apparel retailer, Lululemon has pulled from its shelves a large number of black luon yoga pants, which had been deemed too see-through.
Granted, it was bound to happen, considering the nature of the story at hand.
But we're seeing a deluge of yoga pants puns, the likes of which mankind has never seen.
Look at all these headlines:
"Lululemon stock drops as yoga pants expose problems"— Reuters
"Yoga-Pants Supplier Says Lululemon Stretches Truth"— The Wall Street Journal
"Sheer Lululemon pants would sell, say cheeky observers"— CBC
"Yoga Pants Reveal Lululemon Shortcomings"— The Financial Times
"See-through pants? How Lululemon became the butt of the Internet’s jokes"— The Globe and Mail
"It's clear to see: Yoga pants were too sheer"— The Columbus Dispatch
"I See London, I See France: Lululemon Wears Crisis Well"— MarketingDaily
"Lululemon yoga pant recall sheer comfort for cheaper brands"— The Lantern
Yuk yuk! Once you delve into those articles and many others, you realize how rampant the puns are:
"Another problem like this could leave the company with a lasting (ahem) bum rap."— Jena McGregor at The Washington Post
“It is clear from the disclosed information that [Lululemon] has not yet gotten to the bottom of the problem (pun intended).” — Faye Landes, analyst at Cowen & Co, to The Financial Times
"Are these see-through pants a cover-up for falling revenue? — Amanda Holpuch at The Guardian
"The company's profits are going downward, dog."— Robin Abcarian at the Los Angeles Times
"Investors usually like transparency. But not in this case."— Anne D'Innocenzio and Michelle Chapman at the Associated Press
"And just like that, shareholders ran to cover their own bottom (lines, that is)"— Lydia Dishman at Forbes
Of course, the Twitter-folk would never have allowed themselves to be left behind for yoga-punmageddon:
See-through #Lululemon pants headline suggestion: Sheer Madness!
— Steve Adams (@SteveAdamsWpg) March 19, 2013
No company has embraced transparency quite like Lulumon.
— Adam L. Penenberg (@Penenberg) March 19, 2013
Unwanted exposure for Lululemon cbc.sh/2RTwJWM
— Leo Cheng (@lchungkan) March 20, 2013
I "recall" when Lululemon was nonexistent and the Italian Stallion ate raw eggs and jogged the Philly dawn in thick baggy cotton MAN sweats!
— Robert Buscemi (@RobertBuscemi) March 20, 2013
Flaw or transparent marketing genius? >> See-through yoga pants a pain for Lululemon bo.st/11fhoQG via @bostondotcom
— John R. Dykstra (@John_R_Dykstra) March 20, 2013
Yoga outfitter Lululemon has found itself in a compromising position. ow.ly/jfONifb.me/1BWFJB9gE
— The PR Verdict (@ThePRVerdict) March 20, 2013
Yes, we see right through your silly puns.
SEE ALSO: What It's Like To Work At Lululemon >
Lululemon's sheer yoga pants blunder could have blown the door wide open for competition.
The brand is facing a "tsunami of competition," according to John Zoldis, senior vice president at Buckingham Research Group.
Recalling 17 percent of its yoga pants comes at a dangerous time for the retailer.
Some of the brands on the horizon have greater financial reach and brand value than Lululemon. Others have the boutique appeal that women fell in love with before Lululemon's rapid expansion.
All are growing rapidly and very real competition for the retailer.
Athleta, which is owned by Gap, has been rapidly expanding its store base. Like Lululemon, Athleta puts emphasis on community and in-store events.
There were even rumors that Athleta was poaching yoga instructors from Lululemon. Athleta could be Lululemon's greatest threat because it has the resources to expand quickly and offer similar clothing at lower prices.
Zella is Nordstrom's in-house yoga brand. The brand caused a stir with yoga fans in 2009 after it was revealed that Nordstrom had poached one of Lululemon's top designers.
Zella has the same elite client base as Lululemon, and has received rave reviews among yoga fans. Unlike Lululemon, the brand comes in plus and kid-sizes.
Calvin Klein's yoga brand is carried in major department stores like Macy's.
Its aesthetic is so similar that Lululemon sued the brand for allegedly copying its "Astro" yoga pants. The companies settled out of court.
Lululemon had to recall 17 percent of its black luon yoga pants this week after complaints that they were too sheer.
Now, CEO Christine Day shared the only way to identify whether your yoga pants are affected.
Do the downward dog.
"The only way to test for the problem is to put the pants on and bend over," Day said in an earnings conference call this morning. "It wasn't till we got it in store and started putting it on people that we actually saw the issue."
On the call, Day said that the company is still determining exactly what went wrong with the pants, but said it's she believes its a one-time issue.
The recall could lead to a shortage in stores, leaving room for competitors like Gap's Athleta, Under Armour, and Nike to grow.
Here's a picture of a group of people doing the downward dog:
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
Lululemon is no longer the golden child of retail.
Today, the company reported earnings to a chilly reception from analysts.
Lululemon recently announced it was recalling 17 percent of its yoga pants because of a defect that made them appear too sheer. Same-store sales growth has slowed, and the company has more competition than ever before, leading investors to say the shares are "overvalued."
On a company conference call today, Lululemon CEO Christine Day said that consumers will be out in full force by summer, when luon pants are once again freely available.
"The fundamentals of our business are strong, we delivered excellent results in 2012, and we plan to continue to earn the loyalty of our customers and shareholders every day going forward," Day said.
But there are a host of problems that could hold back her yoga brand.
The sheer-pants debacle "has opened the window wide for competitors to showcase their newest yoga efforts for spring," said Brian Sozzi, chief equities analyst at NBG Productions in New York.
There are general problems with Lululemon's supply chain — the see-through pants scandal was its fourth quality-control issue in the past year. This is even more troubling considering the intense competition the brand is up against.
Competitors like Nike, Under Armour, and Gap are offering very similar products in response to Lululemon's popularity. Nordstrom was accused of poaching the brand's designers, while Calvin Klein was sued for allegedly copying the signature waistband of Lululemon's pants.
Same store sales growth also slowed to 10 percent from 26 percent a year earlier, showing a declining public interest in Lululemon.
Even blogger Carolyn Beauchesne, once the retailer's biggest proponent, complained about how the company has changed.
"Day has ruined everything special about lululemon. The bullet proof quality, the fit, the femininity, the lululemoness of the product," Beauchesne, who goes by "Lulu Addict," wrote. "She is a one-trick pony who grew the company through expansion."
And that's not all. John Zolidis at Buckingham Research said that the company's high inventories are concerning.
"This is a sign that sales were not as good as the company was hoping and could be a factor in its ability to avoid markdowns in the future," he said in a note.
And equity firm The Oxen Group called Lululemon's stock"strongly overvalued."
"The company is working against rising competition from other high-quality fitness clothing brands and we do not see any concrete plans for the 2013 fiscal year that counteract this," the group said in a note.
The recent troubles come as a surprise because Lululemon has been touted as an untouchable success for years.
The yoga and athletic-wear maker had the perfect mix of unique product, eager customers, and impeccable merchandising. Day boasted that the brand sold 95 percent of its product at full price.
Lululemon declined to comment on Wall Street's negative outlook.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
Lululemon recently recalled 17 percent of its yoga pants for being too sheer.
The recall quickly turned into a crisis. Customers were outraged, the company's shares plunged, and the retailer got into a public spat with its supplier.
Products are recalled all the time, from peanut butter to cars to apparel.
So why was Lululemon's recall a full-on fiasco?
First, Lululemon's strategy relies on very tight inventories. The stores only stock a few of every item. This creates the illusion of scarcity, and allows the retailer to sell 95 percent of its merchandise at full price, according to CEO Christine Day.
When inventories are tight to begin with, recalling a large percentage of yoga pants results in a shortage. That means that customers could possibly walk in expecting to shell out $98 for yoga pants, and walk out empty handed.
That leads us to the second problem: Lululemon's increasing competition.
The company made a name for itself by providing the best yoga gear on the market. But since then, deep-pocketed competitors like Nike and Gap have gotten in the game, threatening Lululemon's dominance.
If customers can't get yoga pants at Lululemon, they're likely to go somewhere else instead, which gives other retailers a chance to gain market share.
This is also Lululemon's fourth quality-control problem in the past year. Past issues included bleeding dyes and too-bright fabric.
While Lululemon is working to pinpoint the problem, it hasn't fixed it yet, and analysts fear there could be more.
Still, one recall isn't make-or-break for Lululemon. We'll see the real results of the blunder in three months when Lululemon reports earnings.
Yoga-wear retailer Lululemon is facing more problems than its too-sheer luon pants.
There's also the matter of the competition.
While Nike, Under Armour, and Adidas are trying to get in on the game, Lululemon's most notable rival is Gap's Athleta brand.
Athleta is growing in popularity for a couple reasons. It's lower-priced than Lululemon and hasn't had the quality-control issues currently plaguing the retailer.
But Athleta wisely beats Lululemon in another aspect: its return policy.
Lululemon's return policy is notoriously stringent.
The retailer doesn't allow any returns after 14 days, even on gifts. And even if you do bring the item back in that time it has to be in mint condition with tags intact.
Lululemon CEO Christine Day told The Wall Street Journal that the policy has helped the brand sell 95 percent of its product at full price. It creates the concept of scarcity.
"We aren't Nordstrom," Day told the WSJ. "We aren't your personal shopper."
Meanwhile, Athleta's return policy allows shoppers to return anything, at any time, for any reason.
Here's the return policy from its website:
"Give it a work out. Take it on a run. Wear it to the gym. Sweat in it. If you don't love it, return it. Any time, any reason."
A shopper recently told The New York Times' Stephanie Clifford that the return policy was a key reason she went to Athleta over Lululemon.
"There, 'you can return anything at any time for any reason,'" she told the Times. "And while she had made some returns, 'it’s never been a quality issue.'"
Yelp reviews of Lululemon are full of angry customers who couldn't return products, such as this one:
"Lululemon- when you wrong a customer and misinform them, it's your job to make it right. Shame on you. You have lost a customer and many future purchases for failing to simply take back the pant so I can purchase the one I originally wanted but was told, incorrectly by your salesperson, doesn't exist. I will be sure to give Lululemon top prize whenever the topic of horrendous customer service comes up."
The strict return policy could exacerbate customer relations at a time when shoppers are already concerned about quality.
It's also another reason for fitness enthusiasts to shop at Athleta.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
Lululemon recently recalled 17 percent of the yoga pants it sells in stores after they were found to be too sheer.
The loss is expected to cost the company around $60 million, CEO Christine Day said in an earnings conference call yesterday.
So what will happen to those thousands of pairs of pants?
In the past, the company has recycled discarded products through the company deBrand, where they become art or furniture, reports Jacqueline Detwiler at Esquire.
Lululemon's website also explains the process:
"For products that just don't make the grade (i.e. the function is compromised) we work with a Vancouver-based company, deBrand, to reuse and recycle the product....They’ve found new homes for scuffed, scratched, and sun damaged yoga mats, created art for our stores, and crafted furniture for the SeaWheeze lounge with our factories' extra fabric."
Before it can discard of the pants, however, Lululemon needs to figure out what caused the defect.
It's also worth noting that defects in the past have been relatively minor. Lululemon has a lot more material to dispose of this time.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
Competitors are challenging Lululemon's status as the golden child of retail.
Once lauded for its revolutionary business model the yoga retailer has fallen on hard times recently. Last week, the company recalled 17 percent of its pants for being too sheer.
Athleta is seen as Lululemon's biggest competitor.
The catalogue business was acquired by Gap in 2008.
Since then, the retailer has expanded to include stores and a large e-commerce contingent.
From selection to customer service, Athleta has several competitive advantages over Lululemon. They could be enough to give Athleta global dominance.
Lululemon's basic yoga pants are $98, while Athleta's are $69. This price-point discrepancy runs through most of the products.
Athleta's lower prices will draw more shoppers in.
Lululemon's strange history and corporate culture have led to allegations that it's a cult.
One Yelp reviewer wrote that he preferred Athleta to Lululemon "because it doesn't carry that cultish Lululemon vibe that apparently based on that brand founder's fetish for Ayn Rand."
Lululemon only allows returns within 14 days, even on gifts. Once the merchandise is returned, it has to have the original tags.
Meanwhile, Athleta lets customers return any item, for any reason, at any time. The retailer will even take back clothes after you wear them.
A disgruntled customer says that Lululemon employees made her bend over to prove her pants were see-through.
The yoga retailer announced it was recalling 17 percent of its pants last week because many were too sheer.
The Consumerist first reported about the woman's complaint, made on the Lululemon Facebook page.
"I went into my local store to return my Astro pants and Invert crops, both purchased this month. I was asked to BEND OVER in order to determine sheerness. The sales associate then perused my butt in the dim lighting of the change room and deemed them “not sheer”. I felt degraded that this is how the recall is being handled. I called the GEC to confirm this is their protocol, and they verified that yes, the “educators” will verify sheerness by asking the customer to bend over.
Please explain as to how this is gratifying customer service? If I think my black Luon pants are sheer and there is a mass recall happening, am I not entitled to go in without having to BEND OVER and obtain a refund?"
SEE ALSO: Why Gap's Athleta Will Overtake Lululemon >
Lululemon Chief Product Officer Sheree Waterson is leaving Lululemon just weeks after the company had to recall 17 percent of its pants for being too sheer.
Her last day is April 15, according to a brief statement released by the company. She's been overseeing product at the yoga company since 2008.
The statement didn't say who will replace her.
The company recalled its luon yoga pants last month for being too sheer. The incident was the fourth quality-control issue that Lululemon has had in the past year.
Analysts blame the problems on Lululemon's quick expansion and lack of control over its supply chain.
But the issues come at a time when Lululemon is facing unprecedented competition from other retailers like Gap's Athleta.
While the recent sheer yoga pants recall is the most visible gaffe for Lululemon, longtime customers complained that product quality hasn't been the same in recent years.
But much of the criticism has been focused on CEO Christine Day.
"Day has ruined everything special about Lululemon. The bullet proof quality, the fit, the femininity, the lululemoness of the product," Carolyn Beauchesne, author of the blog Lululemon Addict, wrote last month.
SEE ALSO: Why Gap's Athleta Will Overtake Lululemon >
Last month, Lululemon recalled 17 percent of its pants for being too sheer.
The incident blew the door wide open for Lululemon's mounting competition, cost the company millions of dollars, and resulted in the resignation of its chief product officer.
In a release today, Lululemon explained why so many of its pants were recalled.
"We have found that our testing protocols were incomplete for some of the variables in fabric characteristics," the company said. "When combined with subtle style changes in pattern, the resulting end product had an unacceptable level of sheerness."
In other words, Lululemon wasn't thoroughly testing the product it was putting out.
The company initially blamed the problem on its supplier in Taiwan. The supplier fired back that it wasn't responsible.
Lululemon is implementing a new team and policies to keep the problem from happening again.
It's important that Lululemon take action: the sheer pants scandal was its fourth quality-control issue in the past year.
If consumers don't trust Lululemon, they'll likely go to competitors like Athleta for their yoga-wear.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
Lululemon's stringent return policy is a frequent complaint among customers.
The retailer doesn't accept any returns after two weeks, and even then only takes items with original tags that have never been worn.
Meanwhile, Lululemon's biggest competitor, Athleta, offers full refunds any time and for any reason.
Lululemon's business took a hit last month after the company had to recall 17 percent of its pants for being too sheer. While the company eventually identified the problem in its testing process, the brand's value was damaged.
To gain back customers' trust, Lululemon needs to relax its return policy, writes Sterne Agee analyst Sam Poser.
"Despite the fact that managers have discretion to make exceptions, the strict return policy is a reason for a new customer not to make a purchase," Poser wrote in an emailed note.
Customers have complained about the policy in the past.
Take this Yelp review of a customer who said the return policy meant she wouldn't be going back:
"Lululemon- when you wrong a customer and misinform them, it's your job to make it right. Shame on you. You have lost a customer and many future purchases for failing to simply take back the pant so I can purchase the one I originally wanted but was told, incorrectly by your salesperson, doesn't exist."
Disgruntled customers even created an eBay black market for discarded merchandise.
In the past, Lululemon CEO Christine Day stood by her company's return policy, saying that it helped the brand to sell 95 percent of its product at full price by creating the concept of scarcity.
"We aren't Nordstrom,"told The Wall Street Journal. "We aren't your personal shopper."
But given its recent competition and quality control issues, Lululemon is going to have to start doing more to appease customers.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon
Lululemon is discounting its black luon yoga pants after the sheer pants debacle that resulted in a massive recall.
Brian Sozzi, chief equities strategist at Belus Capital, noticed a pair of the pants marked down at a Philadelphia store.
Dozens of customers also tweeted their delight at finding a sale rack in stores.
But the discounts are problematic because it shows that Lululemon is desperate to get customer back in stores, Sozzi said. The company had to recall 17% of its bottoms last month after they were deemed too see-through.
"The company has lost some consumer trust, and just wants to move product quickly and then re-market the new stuff as it arrives," Sozzi said. "But discounting now is basically cheapening future black luon pants."
Putting items on sale goes against a core part of Lululemon's strategy.
The company's stores stock very few of each item, and sell 95% of merchandise at full price.
This creates the illusion of scarcity and creates "fanatical" shoppers, CEO Christine Daytold The Wall Street Journal.
In fact, when the company holds its annual warehouse sale, customers have been known to travel from all over the U.S. to attend.
But the yoga pants recall resulted in distrust from long-time customers. If women shell out $98 for yoga pants, they expect quality.
Lululemon has identified the defect that caused the sheer pants, and has assured customers and investors that it won't happen again.
But the discounted pants show that the retailer hasn't fully recovered.
SEE ALSO: 15 Hot Brands Vying To Be The Next Lululemon >
There's no better way to predict where shopping trends are heading than poking your nose around a high school lunch room.
Thankfully you don't have to. A new survey by research firm Piper Jaffrey polled more than 8,000 teenagers on everything from where they eat, to which headphones they use when they tune out Science class.
Most noteworthy is the fact that teens still rely on their parents for more than half of their spending money. That might explain why they've started to embrace some new "grown up" shopping habits –– namely, organic eating and discount shopping.
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