Lululemon pants back on shelves after see-through blunder fixed

TORONTO Mon Jun 3, 2013 3:04pm EDT

Pedestrians walk past a Lululemon Athletica store in New York, March 19, 2013. REUTERS/Lucas Jackson

Pedestrians walk past a Lululemon Athletica store in New York, March 19, 2013.

Credit: Reuters/Lucas Jackson

TORONTO (Reuters) - Lululemon Athletica Inc LLL.TO's black "Luon" pants are back on store shelves, the Canadian retailer said on Monday, following a highly-publicized recall in March after the fabric was deemed too transparent.

The company warned in March that it could lose up to $40 million in profit this fiscal year after it pulled its snug-fitting black workout pants made with its signature Luon fabric from stores due to an "unacceptable level of sheerness."

The company has fixed the problem and will be increasing its inventory levels for the yoga pants throughout June, it said in an update on its investor website.

The fabric on the new pants has been put through rigorous testing, with adjustments "to ensure that the fabric will fit the body without being stretched beyond its capability," it added.

The recall sparked a slew of pun-filled headlines and sent the company's stock price down some 12 percent. The stock bottomed in late March and has bounced back nearly 28 percent to trade above where it was before the recall.

Shares were trading little changed at C$80.71 on Monday afternoon on the Toronto Stock Exchange.

The yoga-wear retailer has carved out a profitable niche selling trendy, pricey workout wear for women. It is among a select few Canadian retailers that has found success in the United States and is expanding in Europe and Asia over the next two years.

(Editing by Jeffrey Hodgson and Cynthia Osterman)

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