Company blames 'unacceptable level of sheerness' that cost up to $17m in revenue last month on incomplete testing protocol

The notorious see-through yoga pants which rocked apparel retailer Lululemon last month and cost it up to $17m in revenue seems to have claimed another victim as the company announced on Wednesday that its chief product officer will step down.

Nearly 20% of the company's stock of high end-pants, which can cost up to $100, were pulled from stores in March after the fabric used was deemed too transparent. Sheree Waterson, who has worked for the company since 2008 and in retail for more than 25 years, will leave the company on April 15, the company said in a statement.

Separately Lululemon announced that the "unacceptable level of sheerness" displayed by the black luon pants was caused by incomplete testing protocols.

Multiple store managers had raised concerns over the fabric quality of the pants in early March, and the company decided to pull 17% of its stock from shelves because they did not meet their standards. Lululemon has been working with the fabric company Eclat since 2004 to manufacture the luon fabric, which is made in Vietnam and Taiwan.

Improvements are underway with a new process including "rigorous testing" and revised standards for fabric tolerances, stretch and weight.

Early reports from the company warned of flagging sales because of the pants shortage. In a March 21 earnings call the company predicted lost revenue between $12m and $17m in the first quarter because of the fabric issues. The company expects the losses to continue into the first half of 2013, estimating lost revenue between $57m and $67m.

After learning about the problem, pants were pulled from shelves, showrooms and websites. Customers who purchased the pants after 1 March could return the pants for a full refund or an exchange.

"Our stand for differentiation is the quality of our product. We have been building capacity in the product organization, and we recognize that continued investment in this segment of the business is required to support our future," said Lululemon chief executive officer Christine Day. "We are committed to continually developing best in class fabrics, and are committed to only putting product in our stores that meets our stringent standards."

Lululemon has attracted a cult-like following to its products, including its popular yoga pants that can cost between $72 and $98. Prior to the pants issue, some investors had raised concerns about the company's revenue as less expensive fitness apparel manufactures gain a greater following.