Lululemon Picks New CEO From Toms And Demotes Controversial Founder
Lululemon said Tuesday that Laurent Potdevin, most recently the president of Toms, will replace Chief Executive Officer Christine Day next month, capping a six-month search for her replacement.
Potdevin, who spent more than 15 years at Burton Snowboards before becoming the president of Toms, will be charged with leading Lululemon’s budding international expansion and growth domestically, as it expands into gear for various sports outside of yoga, as well as menswear and athletic apparel for young girls. Lululemon, which is able to sell $98 yoga pants and $108 hoodies to well-off consumers, has one of the highest sales per square foot among retailers in the world, ranking after Apple, Coach, and Tiffany & Co.
The retailer also said that Chip Wilson, Lululemon’s founder, will step down as the company’s chairman but will remain on its board of directors, following a wave of controversy around recent comments he made, as well as revelations about his excessive involvement in the business.
Wilson spurred outrage from Lululemon customers last month after saying on Bloomberg Television that its yoga pants “don’t work” for all women’s bodies, and that some of the problem is “about the rubbing through the thighs.” After that, a number of Wilson’s troubling past remarks were publicized, including the notion that “cigarette-smoking power women who were on the pill” caused growing instances of breast cancer in the 1990s and that birth control has caused the divorce rate to rise.
Day, an ex-Starbucks executive who spent roughly six years leading Lululemon, announced her resignation in June, shortly after the company’s disastrous recall of pants for being too see-through. Wilson, who founded the retailer in 1998, is said to have clashed with Day on the vision for Lululemon, and his involvement created confusion on who was in charge, according to an investigation by Fortune earlier this year. In November 2011, he had the phrase “Who is John Galt?” printed on Lululemon tote bags (a line from Ayn Rand’s Atlas Shrugged) without Day’s knowledge, according to The Wall Street Journal. The bags rankled customers, and Day had to quickly replace them.
“Given Mr. Wilson’s misplaced comments and the corresponding public backlash, we view this as a positive for the stock, as it indicates the board is exercising its fiduciary responsibilities to the shareholders,” said Camilo Lyon, an analyst at Canaccord Genuity Corp. “We also believe this will allow the new CEO to operate free from the founder’s micro-management style.”
Shares were relatively unchanged at 11:30 a.m. in New York. They have dropped 7.7% this year through yesterday, closing at $70.34.
Lululemon has been extremely public with its CEO search, even posting a jokey “CEO Wanted” advertisement on the homepage of its website in June.
Today, the retailer posted YouTube videos introducing Potdevin to customers and provided an FAQ on his appointment to the investor relations portion of its website. The brand’s loyalty is high enough that it has enthusiastic bloggers who write solely about Lululemon products and keep a close eye on management changes at the retailer.
“Given the various product and supply chain hiccups the company has undergone this past year, we believe Mr. Laurent will bring a fresh start and new perspective at this retailer,” Randal Konik, an analyst at Jefferies, wrote in a note today. “We especially like his experience with and exposure to developing premium global brands. We also believe his background in supply chain and operations management should prove very useful in course correcting LULU’s recent troubles.”