Lululemon Athletica’s problem isn’t just that a batch of its black yoga pants was made too sheer and had to be recalled — the popular retailer is now downgrading its financial predictions and watching its stock do a downward dog.
The Vancouver, B.C., company said Monday that it pulled the women’s pants from its stores and e-commerce sites over the weekend after learning that the material was too revealing. The Luon fabric is produced in Vietnam and Taiwan and made with a mix of nylon and Lycra spandex fibers.
In a lengthy FAQ posted on its Web site, the chain said it was investigating how a batch of too-skimpy pants was allowed to reach stores in early March. Lululemon hasn’t changed its manufacturers or ingredient quality since 2004, it said.
Or, in the company’s words: “The ingredients, weight and longevity qualities of the women’s black Luon bottoms remain the same but the coverage does not, resulting in a level of sheerness in some of our women’s black Luon bottoms that fall short of our very high standards.”
The company lowered its initial expectations, which had been an 11 percent increase in same-store sales and revenue between $350 million and $355 million for its first fiscal quarter. Now Lululemon is projecting a 5 percent to 8 percent same-store sales range and revenue between $333 million and $343 million.
Lululemon shares fell $1.82 Tuesday, or 2.8 percent, to $64.08.
— Los Angeles Times
There’s finally some good news for Boeing: European discount airline Ryanair announced Tuesday that it will buy 175 of the company’s popular 737 jets, the largest order ever placed by a European carrier.
Chicago-based Boeing has struggled since its new 787 Dreamliner was grounded by regulators in January following problems with its electrical system. It also was dealt a major blow Monday in the race to win the single-aisle plane market when Indonesia’s Lion Air signed a deal with rival Airbus for 234 A320s.
Ryanair chief executive Michael O’Leary said the deal will allow his airline to expand in markets such as Germany, Spain, Italy, Poland and Scandinavia. Neither side disclosed the purchase price for the 737-800s, but O’Leary said Ryanair negotiated a bulk discount off the total list price of $15.6 billion. Ryanair received a 53 percent discount on a prior 737 order. This time, O’Leary said he was paying “slightly higher” prices.
“I’m paying higher prices, I’m just not allowed to say so,” O’Leary said, joking that Boeing executives had gotten him to drink too much on St. Patrick’s Day.
— Associated Press
l Starbucks said Tuesday that it bought its first coffee farm, where it will research the leaf rust that is devastating Central American crops as well as harvest its own beans. Starbucks will convert the active farm, located on about 600 acres in Costa Rica, to a global agronomy research and development center. Financial details were not disclosed. The center will research the roya fungus, also known as leaf rust, which kills coffee leaves by sapping them of nutrients and lowering bean yields.
l Citigroup has agreed to pay $730 million to settle a class-action lawsuit that claimed investors were misled by the bank’s disclosures when they purchased its debt and preferred stock. The investors’ purchases were made from May 11, 2006, through Nov. 28, 2008. Citigroup denied the allegations and said in a statement late Monday that it agreed to the settlement so it could avoid the expense and uncertainties that come with drawn-out litigation.
l Federal safety regulators are investigating reports of fuel leaks in about 250,000 Mercedes-Benz E-Class cars. The National Highway Traffic Safety Administration and Mercedes have received 533 complaints from owners about a strong odor of gasoline, mainly after refueling. The agency says fuel may be leaking from the upper part of the gas tank. No fires or injuries have been reported. The investigation affects vehicles from the 2003 to 2008 model years.
l Samsung Electronics said it is developing a wristwatch as Asia’s biggest technology company races against Apple to create a new industry of wearable devices that perform tasks similar to those of smartphones. Samsung’s disclosure comes after people familiar with Apple’s plans said last month that the U.S. company has about 100 product designers working on a wristwatch-like device that may perform functions similar to those of the iPhone and iPad.
l A bankruptcy judge Tuesday approved the sale of Twinkies, Ding Dongs, Ho Hos and other brands to a pair of investment firms, Apollo Global Management and Metropoulos & Co. for $410 million. Metropoulos said it hopes to have the cakes back on store shelves by summer. Evan Metropoulos, a principal, said in an interview that he wants to have the snack cakes back in distribution by June. He also said that comedians Will Ferrell and Zach Galifianakis are at the top of his “wish list” for potential pitchmen.
— From news services
l 2 p.m.: Federal Reserve policymakers issue statement and forecast after meeting of Federal Open Market Committee.
l 2:30 p.m.: News conference by Federal Reserve
Chairman Ben S. Bernanke.
l Earnings: FedEx, General Mills, Oracle.