The windows at the Lululemon store in New York’s Soho neighborhood on Monday (above) could be a comment on the unexpected turn of affairs at the company.
Lululemon CEO Laurent Potdevin has abruptly resigned from that role and from the company’s board, following a breach of conduct. As per his employment contract, he will receive $5 million in severance pay: an immediate lump sum cash payment of $3.35 million followed (in 60 days) by $1.65 million over 18 months.
“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 global athletic wear brand stated. The Board of Directors has “immediately begun a search process for a proven and highly-experienced global CEO.”
“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,” said Glenn Murphy, Executive Chairman of the Board. “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.”
As part of his newly expanded role as Executive Chairman, Murphy—the former CEO of Gap Inc., who joined lulu’s board last year—is tasked with “achieving long-term, sustainable results for all stakeholders.”
Three other executives were promoted with additional responsibilities, all reporting to Murphy: Celeste Burgoyne, EVP, Americas, will oversee all channel and brand-facing aspects of the global business, including stores, e-commerce and brand marketing; COO Stuart Haselden assumes responsibility for all operations related to finance, supply chain, people and technology; and Sun Choe, SVP of Merchandising, will oversee product development, design, innovation and merchandising.
The company’s share price dipped 10 percent on the news, Bloomberg noted, dimming its recent bright earnings forecast. Last month the company reaffirmed its outlook to investors, stating that its “growth strategies remain on track to achieve $4 billion in revenue in 2020. The company’s continued success in the market it created is rooted in its strong connection to its guests and vertically integrated business model; embodiment of the active, mindful lifestyle; and category-disrupting product innovation that blends fashion and function.”
Lululemon said that Potdevin’s misconduct was not financial or operational. He was the third CEO in company history. Founder Dennis “Chip” Wilson, a former surfer who founded the brand in 1998, resigned as chairman in late 2013 and tried (unsuccessfully) to take the company private. His successor, Starbucks veteran Christine Day, resigned earlier that year.
The Swiss-born Potdevin, the former president of TOMS Shoes, CEO of Burton Snowboards and an LVMH veteran, assumed the Lululemon CEO role in January 2014. Chip Wilson, who has commenting (via Twitter) on the company he founded, did not immediately comment on Potdevin’s departure.
— Elevate Lululemon (@ElevateLulu) December 8, 2016