By Solarina Ho and Allison Martell
TORONTO Dec 10 Lululemon Athletica Inc
named a new chief executive on Tuesday and said founder Chip
Wilson will step down as chairman, as the upscale yogawear
retailer tries to expand globally and put a series of
embarrassing quality issues and other gaffes behind it.
The company said Laurent Potdevin, most recently president
of trendy footwear brand TOMS Shoes, will replace Christine Day
as CEO in January and emphasized Potdevin's role leading TOMS'
Lululemon, in the early stages of a push into Europe and
Asia, was forced to recall some of its signature black stretchy
pants in March because they were see-through. The incoming CEO
said quality will be a top priority when he takes the helm.
"Product and quality for any premium brand such as Lululemon
is absolutely paramount," Potdevin told Reuters. "It will be a
very clear area of focus for me."
Potdevin, who will move to Vancouver where Lululemon is
headquartered, will have to deal with supply chain problems that
caused the multimillion-dollar recall, fend off tough
competition and shore up Lululemon's reputation.
"This company has jeopardized its long-term relationship
with its customers over the last year, via some product quality
issues, via some board communication by the founder," said
Credit Suisse analyst Christian Buss.
"What I'll be looking for are signs they can re-engage their
customers in a positive way."
Lululemon's usually volatile shares, off nearly 15 percent
since June when Day announced her intention to quit, initially
rose on news of the management and board changes, but were down
1.5 percent at $69.25 on Nasdaq by late afternoon on Tuesday.
Lululemon grew from a single store in Vancouver in 2000 to a
premium brand with more than 225 stores and over a billion
dollars in annual revenue.
It is looking to expand overseas even as it faces growing
competition from retailers including Gap Inc, whose
chain of Athleta stores number 35 and is expected to be up to 65
by year end.
Incoming chairman Michael Casey said Lululemon picked
Potdevin because of his experience building and handling complex
sourcing supply chain systems, and two decades of experience
driving global expansion and branding at premium lifestyle and
"If I had draw up a resume for someone taking this job that
I would be happy with, he checked a lot of the boxes," said
Charlie Wilson, a portfolio manager at Thornburg Investment
Management, one of the retailer's largest institutional
The fund manager note TOMS also has a strong online
presence, which could benefit Lululemon's own ecommerce
Closely held TOMS, which gives shoes to a needy child for
every pair it sells, has grown rapidly since it was founded in
2006. The company has given away 10 million pairs of shoes over
the past seven years and expects to give away another 10 million
in the next year and a half, Casey noted on a conference call.
Potdevin, also the former CEO of Burton Snowboards, started
his career with luxury group LVMH.
Buss at Credit Suisse said he was pleased to see an
executive who had done a good job managing "cult brands." But he
said Potdevin's lack of significant experience operating stores
warranted caution. Unlike Lululemon, TOMS and Burton products
are largely sold by other retailers.
Wilson, who founded Lululemon in 1998 and is the beneficial
owner of about 28 percent of its common stock according to a
September filing, will step down as non-executive chairman prior
to Lululemon's annual meeting in June. He will remain on the
Casey, a former Starbucks Corp executive and lead
director of Lululemon's board for the past six years, said that
the move was a natural evolution for a founder, but told Reuters
he was not aware of any plans for Wilson to significantly change
his equity stake in the company.
Wilson caused a furor last month when he said Lululemon
products were wrong for certain body shapes. He later said he
was "really sad" about the repercussions of his comments, but he
did not retract his original statements.
He has previously said he chose the name "Lululemon" because
the L sound is not in the Japanese language. "It's funny to
watch them try to say it," he said in a 2004 profile in the
National Post Business magazine.
"They had to remove Chip. You can't bring in a CEO and have
a loose cannon," said Howard Davidowitz, chairman of Davidowitz
& Associates, a retail consulting and investment banking firm
based in New York City.
"When you've got a founder sitting there making all sorts of
pronouncements, you're making the new CEO's job 10 times more
difficult. There has to be absolute clarity that this is the
Wilson could not immediately be reached for comment.
Day surprised investors when she said she would leave once a
replacement was found. She led Lululemon as it became a major
retail player, growing at a blistering pace in the United
States, a market few Canadian retailers have cracked.
Potdevin said he will continue Lululemon's expansion drive
and more rapid growth will come with greater brand awareness.
"Once you've got the awareness, you can grow as quickly as
you want. You just have to make sure you have the right platform
to build a business," he said.
Lululemon is due to announce third-quarter results on
Thursday. In September, it trimmed its forecast for full-year
sales and profit.