Today, Monday, Lululemon Athletica announced that their CEO Christine Day would be leaving after 5 years. A successor is yet to be named.
“Being a part of lululemon for the past five and a half years has been an incredible journey. I am proud of building a world class team that has produced one of the best growth, brand and profit stories in retail,” said Ms. Day. “Plans have been laid for the next five years and a vision set for the next ten. Now is the right time to bring in a CEO who will drive the next phase of lululemon’s development and growth. I will continue to actively lead the organization while the Board searches for a new CEO, and will work to ensure a smooth transition.”
“Christine has been an exceptional leader for lululemon, successfully embracing the culture while growing the business and returning value to all of our stakeholders including our guests, employees, partners and shareholders,” said Chip Wilson, Chairman of the lululemon Board of Directors. “I thank Christine for her leadership, contributions and commitment to lululemon. I am confident that we will find the right person to lead this strong team and continue to build on this excellent foundation.”
Lululemon went through an embarassing and costly recall in April when their black Luon yoga pants revealed that they were far too revealing. 70% of the pants had to be recalled and the product officer, Sheree Watson, resigned.
Commenting on events of the first quarter Ms. Day added: “The past quarter has been one of the most important in our company’s history. While we regret that we had quality issues with our black luon we are proud of the organization’s ability to get luon delivered back into our stores within 90 days of having pulled it from our line, all the while keeping our guests happy and engaged with the brand.”
After the announcement, shares dropped 9%, even though Net revenue for the quarter increased 21% to $345.8 million from $285.7 million in the first quarter of fiscal 2012.
What’s also quite interesting is that direct to consumer revenue increased 40% to $54.0 million, or 15.6% of total Company revenues, in the first quarter of fiscal 2013, an increase from 13.5% of total Company revenues in the first quarter of fiscal 2012.
Lululemon’s forecast for Q2 of 2013 stated the following: We expect net revenue to be in the range of $340 million to $345 million based on a comparable-store sales percentage increase of 5% to 7% on a constant-dollar basis. Diluted earnings per share are expected to be in the range of $0.33 to$0.35 for the quarter.
Lululemon has gained a grassroots following over the years from a cross-section of age groups and people outside of just yoga and running fans. Their athletic-wear has become a big hit among young people interested in trendy first layer pieces and often paired with other apparel as simply a part of personal style. This is especially true of snowboarders and surfers, which is where the Lululemon story starts, with founder Chip Wilson from Vancouver.
They are a great example of a brand that’s branched across boundaries into becoming a lifestyle brand outside of their original purpose.