Lululemon Executive Sheree Waterson Stepping Down After Company Recalls 17 Percent Of Its See-Through Yoga Pants

Lululemon Athletica Inc. (Nasdaq:LULU), the self-described yoga-inspired athletic apparel company, said Wednesday that its chief product officer is stepping down after a recall of black pants that were virtually see-through.

The Vancouver, Canada-based company said Sheree Waterson's departure is part of a plan to reorganize the product team and support long-term growth.

“As the organization matures, organizational structure changes are often required,” the company said in an email to the New York Times.

Just last month, Lululemon recalled 17 percent of its stretchy black yoga pants after store managers noticed that the material was thin to the point where it was virtually see-through.

In a press release, Lululemon said the problem is the nylon-and-lycra-blend fabric it calls Luon. On Wednesday, the company said that after evaluating its production issues, it found the problem stemmed from incomplete testing protocols plus a style change in the pants pattern.

At the time of the recall, the company said withdrawing the Luon pants would 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 expected first-quarter earnings of 28 cents to 30 cents a share. It reported earnings of 32 cents a share a year ago.

Lululemon has reportedly hired a new team, including senior-level positions in quality control, raw materials and production, to look into the problem and oversee production of the Luon pants, which cost $72 to $98 a pair. Lululemon has not said when it expected Luon pants to be back on store shelves.

While shares rose 1.04 percent to $64.91 at noon Thursday in New York, the stock had dropped 16 percent this year through the close of regular trading Wednesday, compared with an 8.9 percent gain for Standard & Poor’s 500 Index.

With more than 200 locations, Lululemon has been expanding into men’s and girls’ active wear and opening more stores internationally.