See-through yoga pants are pretty funny, so lululemon athleticas (LULU) recall of such and the resulting profit warning Monday had a whiff of whimsy to it. But considering this mistake seriously hits the one thing that keeps lululemon shares very highly valued its big sales gains it will surely bring forward the question thats been on a lot of lulu investors minds lately. That is: can lululemon continue to deliver what Wall Street expects of it?

Well get a better idea on Thursday, when lululemon reports fourth quarter results and updates first quarter forecasts. From Mondays recall announcement, we already know a few things. Pants that make up about 17% of all bottoms sold in its stores are too opaque, and lululemon is pulling them off the shelves. That will put about a 4% dent in sales in the first quarter, according to the warning, which had been expected to rise about 30%. Comparable store sales gains in the first quarter are expected to be between 5% and 8% instead of the 11% earlier predicted. The company is still working on a profit estimate for the quarter.

While most retailers would kill for a 6% comp sales gain these days, lululemon is no ordinary retail investment. Wall Street expects very big sales and profit gains from lululemon, as evidenced by its share valuations, including PE ratio. Take a look at lululemons forward price to sales ratio compared to Under Armour (UA), a competitor that is also wildly popular with investors.

Even before the exposure problem, lululemons same store sales growth was forecasted to slow from great gains that propelled the stock in past years. While the shares still have a lot of fans the companys $100-plus yoga pants are still hugely popular worriers have emerged recently. Concerted competition from Nike (NKE), Under Armour and department stores may eventually eat at lululemons great profit margins. Manufacturing problems not unlike the one that led to see-through pants have hurt sales at couple of times before. Bank of America Merrill Lynch has a sell rating on the shares.

The two stock charts below show lululemons share price since its 2007 IPO, and then a close-up of the change in price since it announced the recall Monday morning. Perhaps there are clues there about lululemon shareholder intentions. Was the level of selling these two days commensurate with the news delivered? Or does it seem this was the excuse a lot of shareholders were looking to take profits? You decide.

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at editor@ycharts.com.

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The Yoga Pants May Be See-Thru, But the Growth Story Has Become Murkier

By Rebecca Macatee, E! Online

Are you one of the millions of women suffering from the Lululemon yoga pants recall?

Jimmy Kimmel feels your pain. On Tuesday, the late-night host premiered a hilarious PSA drawing attention to "the crisis sweeping the nation," aka a possible yoga pants shortage resulting from the recall of hundreds of semi-transparent bottoms.

"I know this seems like a joke, but for white people, it isn't a joke," Jimmy quipped. "This is as serious as it gets."

More on the Lululemon yoga pants recall

Clearly. In the clip, paid for by Save Our Spandex, women resort to wearing cardboard pants, bubble wrap pants, and yogurt pants when their beloved Lululemons become unavailable.

"With your donation of just $120 a day, you can put one woman in a pair of yoga pants," one woman says.

Or you could, you know, not wear designer workout clothes.

Check out stars' hot workout gear

That said, watch the PSA above and let us know on our Facebook page what you think!

See the rest here:
'Jimmy Kimmel Live' pokes fun at Lululemon yoga pants shortage

After customers complained that a batch of the company's signature yoga pantswere too transparent, Lululemon tried to make a scapegoat out of the Taiwanese company that manufactures the pants. Bad idea. Said supplier now says the pants were no different than any other batch. The Eclat Textile Company, whose clients include everyone from Gap to Under Armour, said Tuesday that Lululemon had signed off on the shipment, suggesting that Lululemon made the whole thing up. "All shipments to Lululemon went through a certification process which Lululemon had approved," Eclat's chief executive Roger Lo told The Wall Street Journal. "All the pants were manufactured according to the requirements set out in the contract with Lululemon." Ladies and gentlemen, we have a yoga pants scandal on our hands.

RELATED: The Very Not Zen Battle of the Yoga Pants

So which one is it? Did Eclat make a bad batch of $100 yoga pants, or did Lululemon just design transparent $100 yoga and milk the market for as long as it could? It's really hard to say. When Lo talked to the press, he said that Lululemon hadn't contact his company about the recall which is kind of weird since Lululemon effectively blamed Eclat for screwing up the "level of sheerness" during the manufacturing process. (It's worth pointing out that Lululemon also said it was working closely with the manufacturer "to understand what happened during the period this fabric was made.")It's possible that there's a third party, some company that supplied Eclat with the fabric for the pants, clearing it somewhat from the blame. But at this point, this particular incident really is a frustrating finger-pointing match that's left Lululemon out about $20 million in lost sales and a whole lot yogis out of high-priced pants.

RELATED: Lululemon's Too-Thin Yoga Pants Fiasco Could Cost the Company Over $20 Million

Let's get real about this stretchy trousers tale, though. It's pretty obvious that the supplier gains nothing by saddling the blame, however the perhaps unexpected media circusthat gathered around this see-through yoga pants scandal highlighted a number of questionable incidents in recent Lululemon history. As a Credit Suisse analyst pointed out in a note to clients that this is Lululemon's "fourth quality control issue in the last year." Not counting this latest debacle, two out of the other three issues involved the sheerness of its fabrics. Clearly, something is up.

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Along these lines, other analysts suggested that Lululemon needs to spend more time in Taiwan to make sure the manufacturers' work is up to snuff. No matter whose at fault in the growing list Lululemon's quality control issues, it can't hurt to get to the root of the problem. Then maybe next time, someone will spot the bad batch, before they ship $20 million worth of transparent yoga pants around the world.

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Lululemon's See-Through Yoga Pants Problem Takes a Turn for the Scandalous

SOS, SOS!

Yoga sportswear maker Lululemon as you may have already heard has been forced to recall hundreds of their basic black yoga pants due to a manufacturing error that made the stretchy, slimming leggings too see-through. Now, Lululemon is experiencing a shortage of the pants, the companys stock is dropping, and the world of yoga as wealthy, new age-y ladies once knew it is changing forever.

Jimmy Kimmel, patron saint of the yoga pants crisis, has taken it upon himself to create the public service announcement below, which sheds some light on the seriousness of the situation. Without the hundred dollar pants, what will yoga enthusiasts wear? Cardboard? Bubble wrap? Yo gurt pants?

Check it out, and let us know what youll be wearing without the option of designer workout pants.

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Save our spandex! Jimmy Kimmel creates PSA for yoga pants shortage

NEW YORK (AP) -- Lululemon has yanked its popular black yoga pants from store shelves and online after it found that the sheer material used was revealing too much of its loyal customers.

The see-through yoga garb is the latest in a series of quality glitches that threatens to alienate the retailer's hardcore fan base, which has so far been more than willing to shell out $100 for pants and other athletic garments. These legions of followers have helped Lululemon, founded in 1998, become a billion-dollar business.

Eva Glettner, 33, of Los Angeles is a case in point. Glettner, who has been a devoted fan of Lululemon, said she'll now shop only at Target to buy her yoga outfits.

"You expect a certain quality, and they definitely let me down," Glettner said. "For that price point, it's unacceptable."

Glettner says Target has similar pants for $30. "It's hard enough making a commitment to working out without worrying about whether you are baring your behind."

Lululemon Athletica Inc. said on its website that it first began to understand the extent of the problem on March 11 as part of its weekly call with store managers, who voiced worries about sheerness. Lululemon declined to respond to Associated Press queries about whether the problem was discovered when customers started to return the Luon pants, the latest batch of which went on sale at the beginning of the month.

But Faye Landes, an analyst at Cowen & Co., believes customers reported the problem to store managers, who in turn reported back to management.

"If this is indeed the case, we suspect a serious lapse in (the company's) supply chain, quality control and vendor management and specifically in its quality assurance program," she said.

Investors usually like transparency. But not in this case. Lululemon's stock price slid $3.90, or 6 percent, to $62, before recovering and closing Tuesday at $64.08, lobbing more than $250 million off of its market value in one day. The stock is down 16 percent so far this year, while the broader markets have been hitting multiyear highs.

Lululemon insists that the problem didn't occur because it changed specifications for the clothing or switched suppliers. It warned that the recall could lead to short supplies and will hurt its first-quarter revenue. The 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.

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See-through yoga pants a pain for Lululemon