Lululemon Athletica Inc on Monday announced that Laurent Potdevin has resigned as chief executive officer effective immediately, saying that he fell short of the company’s standards of conduct.
The Vancouver-based maker of yoga pants and other athletic-inspired clothing did not offer specifics, but said it expects all employees to “exemplify the highest level of integrity and respect for one another.”
It was not a single event, but “a range of instances” at issue, none of which involve the financial or operational aspects of the business, a person familiar with the situation said on condition of anonymity because they were not authorized to speak publicly.
Photo: Reuters
Lululemon said it has begun the search for a successor.
Potdevin became chief executive officer in January 2014 at the company whose products have been aimed mainly at women.
He led the rebuilding of Lululemon’s brand after a major flub — thousands of stretchy black yoga pants were recalled after customers complained that they were too sheer — cost the company millions and sent the stock tumbling.
A previous chief executive officer, Christine Day, had left citing personal reasons.
Founder Chip Wilson resigned as chairman in 2015 after suggesting that some women’s bodies were not made for Lululemon’s clothing.
Potdevin also has resigned from the company’s board.
In the interim, Glenn Murphy has been elevated to executive chairman, previously co-chairman and a member of the board since April last year. Three senior members have also taken on expanded roles and are to report directly to Murphy.
“While this was a difficult and considered decision, the board thanks Laurent for his work in strengthening the company and positioning it for the future,” Murphy said. “Culture is at the core of Lululemon and it is the responsibility of leaders to set the right tone in our organization. Protecting the organization’s culture is one of the board’s most important duties.”
Lululemon has agreed to pay Potdevin US$3.35 million in cash now and US$1.65 million over a period of 18 months in monthly installments, according to a filing with the US Securities and Exchange Commission.
Analyst Neil Saunders, managing director of GlobalData Retail PLC, called on the company to be more clear about the reasons for Potdevin’s departure and said failing to do so would cause speculation that would “ultimately harm the brand.”
He also called Potdevin’s exit “a blow to Lululemon.”
“During his tenure, Mr Potdevin oversaw the steady expansion of Lululemon through both calm and rough periods in the athleisure market,” Saunders wrote on Monday. “His innovative approach and his clear sense of Lululemon’s values and essence is one of the reasons the company has enjoyed continued success, even while other sporting goods brands struggle to generate growth.”
The change could lead to “instability” at a time when the company is working toward its goal to become a US$4 billion brand by 2020 from US$2.6 billion in sales, Jefferies Group LLC analyst Randal Konik said in a report on Monday.
Lululemon shares, which had fallen 1.5 percent during regular trading as US stocks slumped overall, dropped another 3 percent after the announcement.
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