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Lululemon Sued by Shareholders Over Sheer Pants

A new suit claims the company concealed the news from investors


LululemonAthleticaLogoThe recall of yoga pants so sheer they could be seen through when stretched is now the subject of another lawsuit against Lululemon Athletica (LULU).

On Tuesday, a shareholder filed suit in U.S. District Court in Manhattan, accusing the company’s chairman and recently-departed CEO of withholding information about the defective yoga pants. The suit, which could get class-action status, also claims that the company did not reveal that it was negotiating the departure of CEO Christina Day, Reuters notes.

Lululemon Goes for Humor With CEO Wanted Posting
Lululemon Goes for Humor With CEO Wanted Posting

The company’s failure to disclose problems with the yoga pants prior to the announcement of the recall produced an artificial rise in its stock price, harming investors who lost money when the stock fell.

Lululemon has said that the March recall of the too-sheer yoga pants could trim its annual earnings by $40 million.

In May, another lawsuit, filed in Delaware, accused the company of issuing bonuses to senior management prior to the yoga pants recall.

In June, it was reported that Lululemon’s chairman sold $50 million worth of company shares on the day its board learned that Day was leaving the company.

Shares of Lululemon fell almost 1% in Wednesday morning trading.

Article printed from InvestorPlace Media,

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