Lululemon founder steps down
The founder and chairman of clothing retailer Lululemon Athletica is stepping down, about a month after he made controversial comments seemingly blaming customers' weight for the company's recent sheer pants problem.
In a statement from Lululemon early Tuesday, the Vancouver-based retailer said Chip Wilson will resign prior to the company's annual meeting next June and be replaced by Michael Casey, the lead director of the board.
For months, Lululemon (NASDAQ:LULU) has been struggling to deal with issues regarding the sheerness of its Luon yoga pants after pulling them from store shelves in April because they were see-through, costing the company millions of dollars in sales.
Lululemon had blamed the problems in the spring on a style change and production issues.
But in an interview last month, Wilson ignited a firestorm by suggesting to Bloomberg TV that production issues may not be the only issue.
"Quite frankly, some women's bodies just actually don't work for it," he said. "It's really about the rubbing through the thighs, how much pressure is there."
Since then, a number of online petitions have surfaced calling for Wilson to apologize.
In addition to his resignation, the board of directors at Lululemon said it has appointed Laurent Potdevin as the new CEO to succeed Christine Day, who was CEO since 2008 and announced her intention to resign in June.
Day is expected to remain with the company through the end of the company's fiscal year to ensure a smooth transition.
"After a thorough search, Laurent emerged as the natural choice to lead our continued growth and global expansion," said Casey.
"We believe Lululemon will benefit from Laurent's leadership experience and proven track record of success in building global brands.
Potdevin most recently served as president of TOMS Shoes, a company founded on a goal of matching every pair of shoes purchased with a pair of new shoes given to a child in need. Potdevin previously spent 15 years at Burton Snowboards, serving as president and CEO from 2005-2010.
"I am excited and honoured to be joining Lululemon," said Potdevin.
"It is an exceptional brand with an extraordinary team that creates technical, beautiful products, and builds authentic consumer experiences."
Lululemon is expected to release its latest quarterly results on Thursday, but said it will hold a conference call Tuesday to further discuss the executive changes.
The company is also battling several legal issues as a result of the sheer pants issue.
In July, a third class-action lawsuit was filed against Lululemon in a New York court related to the controversial recall of the Luon pants.
Morgan & Morgan, a major American law firm, launched the action on behalf of investors who bought Lululemon stock between March 21 and June 10.
Like the other suits, the July filing alleges disclosure shortcomings that artificially inflated the retailer's stock price.
The class action claims defects that made the pants see-through resulted in part from the company's alleged attempts to raise profit margins by cutting costs. It also alleges Lululemon stock was artificially inflated as a result of the defendants' positive statements.
The first suit was filed in May in Delaware by the Hallandale Beach Police Officers and Firefighters' Personnel Retirement Fund in May. The fund filed suit over Lululemon's decision to increase potential bonuses for executives prior to announcing the recall.
The second suit was filed in New York in July on behalf of plaintiff Houssam Alkhoury.
None of the allegations have been tested in court.
The company's stock fell four cents Monday to close at US$70.29 in New York.
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