See-through pants problem causes Lululemon recall

A Lululemon store in New York City.

NEW YORK (CNNMoney) Lululemon Athletica will be hurt by a large recall of black yoga pants that were unintentionally see-through.

"The ingredients, weight and longevity qualities of the pants remain the same, but the coverage does not, resulting in a level of sheerness in some of our women's black Luon bottoms that falls short of our very high standards," the company said in a statement late Monday. "We want you to Down Dog and Crow with confidence and we felt these pants didn't measure up."

Lululemon said the recall, which amounts to 17% of all women's pants sold in its stores, will cause shortages of this staple and have a significant impact on its financial results.

Before the recall, the company said it was on track for an 11% increase in sales at stores open at least a year, with revenue in the first quarter expected to come in between $350 million and $355 million. Now it expects only a 5% to 8% sales gain, and revenue of between $333 million and $343 million.

The company said the problem occurred despite there being no change in manufacture or the ingredients used to make the fabric.

How Lululemon quintupled its stock price

The store has been a fast-growing success story. Sales have tripled in the past three years; results for the most recent fiscal year are due Thursday. The stock is up 1,800% over the past four years.

Lululemon (LULU) shares were down about 5% Tuesday morning, and are down 17% for the year.

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Volkswagen to recall 384,181 vehicles in China

HONG KONG (CNNMoney) State regulators said Wednesday that Volkswagen will recall 384,181 cars in China, just days after the automaker was the subject of a state television expose.

The investigation, which aired Friday as part of China Central Television's annual consumer rights broadcast, examined problems with Volkswagen's direct shift gearbox -- or DSG.

The closely-watched CCTV program detailed cases in which the gearbox was causing unanticipated changes in speed while driving.

Following the broadcast, Volkswagen and its Chinese manufacturing partners said they were cooperating with regulators, but did not detail how many cars would be recalled.

On Wednesday, China's General Administration of Quality Supervision listed the recalled models in a statement posted on its website.

Volkswagen (VLKAF) controls a substantial market share in China, and builds cars in partnership with SAIC Motor Corp and FAW Group. Volkswagen has aggressively expanded its operations in China, and now counts the country as its largest single market.

Most of the recalled cars were manufactured by FAW Group, including the popular Golf, Polaris, Jetta and Magotan models.

Related story: Yum Brands stumbles in China

The two-hour CCTV program that targeted Volkswagen is broadcast each year on World Consumer Rights Day, and often features prominent western brands along with Chinese companies.

Apple's customer-service operations also were criticized this year. McDonald's (MCD, Fortune 500) and Carrefour (CRERF) were highlighted in 2012.

Food and product safety issues are drawing increasing attention in China following a series of scandals. In response, the government has pledged to empower regulators and sharpen its response to consumer complaints.

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