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Pedestrians walk past a Lululemon Athletica store in New York

LUCAS JACKSON/REUTERS

Just over two weeks after Lululemon Athletica Inc. was forced to pull many of its signature black women's yoga pants from its stores because they were too see-through, its top product executive is leaving the company.

The Vancouver-based athletic wear retailer acknowledged Wednesday that its fabric-testing protocols were "incomplete" for some of the factors involved in the complex process of producing its "luon" stretchy fabric for the pants.

The company said that while the fabric involved may have met testing standards, "it was on the low end of Lululemon's tolerance scale."

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"We have been building capacity in the product organization, and we recognize that continued investment in this segment of the business is required to support our future," Christine Day, chief executive officer at Lululemon, said in a statement.

The fast-growing merchant was forced in mid-March to recall 17 per cent of its women's yoga pants because the fabric was too sheer, resulting in what it expects will be as much as a $67-million (U.S.) hit to its revenue this year.

Now the company is racing to patch up its mistakes while it forges ahead with a major expansion, including plans for stores outside North America, putting further pressure on its operations and senior team.

In a brief statement Wednesday, the company said Sheree Waterson, its chief product officer who joined Lululemon in 2008, will leave Lululemon effective April 15. It said the departure is part of a broader reorganization of its product group. The retailer would provide no further comment or say whether Ms. Waterson would be replaced.

"We appreciate the many contributions that Sheree made during her time with Lululemon, particularly in the area of design," Ms. Day said.

In a separate statement Wednesday, the company said it had already taken steps prior to the black-pants gaffe to bolster its internal product expertise, including adding senior officials in the areas of quality, raw materials and production. The new team was instrumental in determining the root cause of the issue, it said.

But the combination of subtle style changes in pattern and complex fabric production resulted in an end product that "had an unacceptable level of sheerness," it said.

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"We are committed to continually developing best-in-class fabrics, and are committed to only putting product in our stores that meets our stringent standards," Ms. Day said.

The black-pant problem wasn't the first time in the past year or so that Lululemon has faced product challenges. Last summer, neon-coloured dyes in items were bleeding, forcing the retailer to apologize to customers. It has also grappled with customer complaints on its own website about quality issues, including too-transparent garments.

"The time needed to remedy the issues is at question," Camillo Lyon, an analyst at Canaccord Genuity, said in a report last month.

Jennifer Black, retail analyst at Jennifer Black & Associates, said she has noticed other product changes that do not appear to be resonating with customers and hard-core Lululemon enthusiasts, such as changes to gussets, and shorter tops and jackets.

"The company needs to find a better balance between the new product lines and the core pieces," Ms. Black said in a report last month. She urged Lululemon to bring back more of its iconic pieces, such as its "stride" jacket and its "scoop neck" tank top, just as it recently reintroduced its roomier "still" pants after customers complained that it was no longer on store shelves.

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