The sudden departure of Lululemon Athletica’s CEO, Laurent Potdevin, amid allegations of misconduct will be a blow to the Canadian yogawear retailer, analysts have said.
The yoga and athletic wear brand said yesterday (5 February) that Potdevin had resigned as chief executive and as a member of the board with immediate effect.
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“Lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr Potdevin fell short of these standards of conduct,” the company said. “The board of directors has immediately begun a search process for a proven and highly-experienced global chief executive officer.
“Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organisation. Protecting the organisation’s culture is one of the board’s most important duties,” explained executive chairman Glenn Murphy.
Potdevin was president of Toms Shoes and chief executive of Burton Snowboards before joining Lululemon in early 2014. During his tenure he has overseen the steady expansion of Lululemon.
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Early last month the retailer upped its fourth-quarter net revenue and earnings guidance on the back of better than expected holiday sales.
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By GlobalDataLululemon ups Q4 guidance on holiday momentum
Neil Saunders, managing director of analyst GlobalData Retail, says that while the reasons for the departure of Potdevin are unclear, his exit is a blow to Lululemon.
“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 brands struggle to generate growth.
“We also believe today’s announcement is vague and damaging. Lululemon owes it to investors and to customers to be clear about the reasons Potdevin was made to depart. As a company that prides itself on transparency and openness, we would expect it to have an honest conversation with stakeholders. Failure to do so will likely lead to speculation which could ultimately harm the brand.”
Three of Lululemon’s senior leaders will now take on additional responsibilities, reporting to Murphy. Celeste Burgoyne, EVP of Americas, will oversee all channel and brand-facing aspects of the global business, including stores and e-commerce, as well as brand marketing, while COO Stuart Haselden will have responsibility for all operations related to finance, supply chain, people, and technology. Sun Choe, SVP of merchandising, will guide all aspects of product development, design, innovation, and merchandising.
Oliver Chen, analyst at Cowen & Company, believes the CEO search could take 6-12 months, and that the board is the will be seeking someone with a proven track record in the consumer products and/or luxury sectors, global consumer retail experience, and expertise in brand management.
Until then, he takes comfort from the fact that the senior leaders who previously directly reported to Potdevin will now report to former Gap Inc CEO Glenn Murphy, who “has a good balance of supply chain expertise, merchandise execution, and stores and digital integration.”
