A Question Of Transparency: Lululemon Athletica Inc.

It is a pioneer in the market for technical athletic apparel–in particular clothing geared towards yoga–and styles itself as a retailer with deep ties to local communities. So how did Lululemon Athletica Inc. find itself at the center of a class action lawsuit that alleges the company made materially false and misleading statements and omissions in connection with a product recall? What can other public companies take from this incident and what lessons does it provide about the importance of continuous disclosure in securities regulation?

SHEER PANTS AND ALLEGATIONS OF OPAQUE DISCLOSURE

On March 18, 2013 Lululemon Athletica Inc. ("Lululemon") issued a press release advising that certain shipments of black luon pants did not meet the company's "very high standards" and that the resulting product recall would have a "significant impact" on financial results. The press release stated that while the ingredients, weight and longevity of the pants remained the same,