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After Lululemon see-through pants fiasco, exec departs

Clothing made by Lululemon Athletica Inc. is on display for sale in Pasadena, Calif. in this March file photo.
Clothing made by Lululemon Athletica Inc. is on display for sale in Pasadena, Calif. in this March file photo.Kevork Djansezian / Getty Images file

Lululemon said Wednesday that its chief product officer is stepping down, as it updated the production problems it has had with see-through pants.

The Canadian yoga wear maker said Sheree Waterson will leave effective April 15.

In a statement, the company said the departure was part of a plan to reorganize its product team to support long-term growth. It wouldn't comment specifically if the departure was related to the pants problem.

"As the organization matures organizational structure changes are often required," the company said in an email response to a query.

Lululemon late last month pulled its Luon pants from store shelves because the fabric was too sheer. On Wednesday the company said after evaluating its production issues, it found the problem stemmed from incomplete testing protocols combined with a style change in the pants pattern. Lululemon hired a new team, including senior level positions in quality, raw materials, and production, to look into the problem and oversee production of the Luon pants, which cost $72 to $98.

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Luon pants, made from a combination of nylon and Lycra fibers, are one of the retailer's product staples and account for about 17 percent of all women's pants in its stores. The company is offering customers full refunds or exchanges Lululemon did not say when it expects Luon pants to be back on shelves.

CEO Christine Day said the company stands by the outlook it offered on March 21 during an earnings report that came after the pants problem arose.

At that time, the company said withdrawing Luons will cut its revenue by $12 million to $17 million in the first quarter and by $45 million to $50 million for the rest of the year, particularly in the second quarter. It also said it expects first-quarter earnings of 28 to 30 cents per share. It reported earnings of 32 cents per share a year ago. The company expects the recall will pull its earnings down by 11 to 12 cents per share.

Analysts expect earnings of 29 cents per share on revenue of $339.7 million, according to FactSet.