Tags: Lululemon | CEO | Step-Down | Shares

Lululemon's CEO to Step Down; Shares Slide

Monday, 10 Jun 2013 06:26 PM

Lululemon Athletica Inc., the yoga-wear retailer that recently recalled one of its most popular styles of pants, said Chief Executive Officer Christine Day will step down once a replacement is found. The news sent the company's shares down sharply in late trading.

The board has formed a search committee, and the decision is being announced now so it can have a "healthy transition period," Vancouver-based Lululemon said Monday in a statement. Day, 51, became CEO in June 2008.

Lululemon has tripled sales in the past three years as female shoppers paid premium prices for its workout gear, and Day was moving the brand into running and golf apparel while opening stores in Europe and Asia. The performance was marred earlier this year when the company pulled its black Luon pants from shelves because a production defect made them too transparent when the wearer bent over, a misstep that cost the chief product officer her job.

"We assume her pending departure is in some way related to the sheer pant issue," Howard Tubin, an analyst with RBC Capital Markets in New York, wrote in a note to clients. "Ms. Day's departure, along with the recent departure of the chief product officer, continues to bring a new level of uncertainty to the LULU story."

Lululemon shares slid 13 percent to $71.83 in aftermarket trading in New York. The shares had risen more than fivefold from June 27, 2008, the last trading day before Day took over as CEO, through the close of regular trading Monday. The Standard & Poor's 500 Index gained 29 percent in that time.

Pants Recall

Lululemon announced the recall of certain shipments of black Luon pants, which accounted for about 17 percent of all women's pants it sells, in March and cut its sales forecast for its fiscal first quarter. Two weeks later, the company announced that Chief Product Officer Sheree Waterson would be stepping down.

The company said last week that it's restocking the pants in stores and online this month. The retailer offered full refunds or exchanges to customers who bought the garment after March 1 either online or in stores.

Lululemon said Monday that net income for the quarter ended May 5 rose 1.4 percent to $47.3 million, or 32 cents a share, from $46.6 million, or 32 cents, a year earlier, the company said in the statement. Analysts projected 30 cents, the average of 25 estimates compiled by Bloomberg. Sales rose 21 percent to $345.8 million.

Day joined Lululemon in January 2008 as executive vice president of retail operations after 20 years at Starbucks Corp., with her last position there leading the coffee-shop chain’s operations in Asia.

The company also said Monday that it will delist from the Toronto Stock Exchange at the close of trading on June 24.

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Lululemon Athletica Inc., the yoga-wear retailer that recently recalled one of its most popular styles of pants, said Chief Executive Officer Christine Day will step down once a replacement is found.
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2013-26-10
Monday, 10 Jun 2013 06:26 PM
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