A retirement fund for police and firefighters in Florida is suing Lululemon Athletica Inc., taking issue with a decision by Lululemon's compensation committee to boost the maximum payout of the executive bonus plan just before a $60 million recall of yoga pants. The Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund filed the lawsuit in the Chancery Court of Delaware. The fund asserts that the bonus hike represents a breach of the board's obligations to the company and its shareholders, because the board was aware of the problem that led to the recall.

Lululemon Athletica Inc. provided an update on its black luon production issues. After an evaluation of lululemon's previously disclosed black luon production issues, the company concluded that the current specification and testing protocols for the signature fabric luon that were developed in 2006 have not materially changed. However, production of luon is a complex process with a number of different inputs, and fabric is the key factor. While the fabric involved may have met testing standards, it was on the low end of lululemon's tolerance scale and have found that testing protocols were incomplete for some of the variables in fabric characteristics. When combined with subtle style changes in pattern, the resulting end product had an unacceptable level of sheerness. lululemon had taken steps prior to the black luon issue to bolster its internal product expertise, including the addition of senior level capabilities in quality, raw materials and production. Work streams and actions include: Testing & processes: lululemon's quality team is assessing all luon products in the production pipeline according to newly implemented rigorous testing and quality processes that includes revised specifications for modulus (stretch), weight and tolerances. Factory oversight: lululemon employees have been stationed in factories to monitor and test products and will educate internal teams and manufacturing partners on new testing standards and methodologies. Leadership and structure: lululemon is building a stronger internal structure with new leadership and cross-functional team capability that the company believes will create a more robust organization to support its long-term growth strategy.

Lululemon Athletica Inc. announced a leadership change in the product organization. In conjunction with a reorganization of product organization, Chief Product Officer Sheree Waterson will be leaving lululemon effective April 15, 2013. Ms. Waterson served as Chief Product Officer. She joined lululemon in 2008 and has over 25 years of consumer and retail industry experience.