Process Fun of the Week: Transparency in business doesn’t always pay off… just ask Lululemon

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Sam Miranda

Yoga - an ancient, Hindu exercise lauded for its physical, cerebral and spiritual benefits.

Its exponents include Manchester Utd’s 39 year-old icon Ryan Giggs, who credits it as the force behind his extraordinary longevity, and pop legend Sting, who has embraced its tantric elements.

Canadian-based international retailer Lululemon, in its own words a provider of "yoga clothes and running gear for sweaty workouts," was taking full advantage of the yoga boom. That’s until a quality control fiasco took the exercise’s "liberating" qualities to a level that even Deepak Chopra would find alarming.

On 18thMarch, Lululemon announced that it would recall all shipments of its Luon fabric women’s bottoms made available in stores at the start of the month. The reason given was unacceptable levels of sheer. In layman’s terms, the pants were too revealing.

In response to the production gaffe, Chief Executive of Lululemon Christine Day stated: "While the fabric involved may have met testing standards, it was on the low end of Lululemon’s tolerance scale and we have found that our testing protocols were incomplete for some of the variables in fabric characteristics."

The incident took a farcical turn when Day explained how customers could perform their own QC check to detect a defective pair: "Put the pants on and bend over."

This comical announcement didn’t prevent the Lululemon business from taking a real spanking. Shares in the Canadian company plummeted 4.8% in the first few hours to $62.75, and Q1 revenue forecasts are down $17 million from $350 to $333 million. Chief product office Sheree Waterson has taken the brunt of the debacle, and is set to be relieved of her position on the 15th of April.