Lululemon founder Wilson stepping down as chairman; co. names Toms Shoes exec as next CEO

  • Article by: ANNE D'INNOCENZIO , Associated Press
  • Updated: December 10, 2013 - 1:05 PM

NEW YORK — Lululemon Athletica Inc. is hoping new faces at the top will help it bounce back from a series of embarrassing issues that have hurt its image.

The upscale yoga clothing maker, based in Vancouver, announced that founder Chip Wilson is stepping down as chairman after raising ire with his comments about the body types of potential buyers of the retailer's yoga pants. The company also named a new CEO.

Wilson, who founded the company in 1998 and still exerted a strong influence, will retain his board seat.

Christine Day, who had been CEO since 2008 but announced her intentions to leave in June, will be succeeded by Laurent Potdevin. Potdevin, a 20 year-industry veteran, was most recently CEO of Toms Shoes.

Toms has made a name for itself as a socially conscious company that matches every pair of shoes purchased with a pair of shoes given to a child in need.

Potdevin will take over the top role in January and will become a board member at that time. Day is expected to stay with Lululemon through the end of its fiscal year to help with the transition. He will report directly to the board.

The Canadian company named lead director Michael Casey as chairman. Casey had been on Lululemon's board since 2007. Wilson will resign as chairman before the company's annual meeting in June.

"(Laurent) is a seasoned leader with a remarkable track record of execution and will be a strong cultural fit within our team of passionate and highly skilled individuals," Casey said in a conference call with analysts Tuesday morning.

The management changes come as the maker of yoga clothing is trying to recover from a series of quality issues and other embarrassments that have threatened to alienate its loyal followers Those devotees, willing to shell out $100 for a pair of yoga pants, helped Lululemon ring up $1.4 billion in sales last year.

Lululemon has endured complaints about the sheerness of some of its pants, which made them see-through at times. Customers also complained of pilling after a few months of wear — or even just a few uses — and about holes and seams coming apart.

The retailer pulled one style of its popular yoga pants from store shelves in the spring, blaming sheerness on a style change and production issues. Fixing the problem cost the company millions and made investors question quality control. New pants have since hit stores, but the sheerness complaints have continued, in addition to the new gripes about wear and tear.

Wilson also raised ire by saying in a recent television interview that some women's bodies "just don't actually work" for Lululemon pants. He also said thighs rubbing over time will cause the pants to wear out too quickly.

Wilson did seem to apologize to Lululemon's workers for the criticism his comments received, but didn't retract his original statements.

Analysts who follow the company believe Wilson alienated some core customers and potentially opened a door in the lucrative market to rivals like Nike, Under Armour, Athleta and others.

Still, many analysts praised the company's move to hire Potdevin, who they believe has good experience in building global brands.

"Given the various product and supply chain hiccups the company has undergone this past year, we believe Mr. Laurent will bring a fresh start and new perspective at this retailer," Jefferies retail analyst Randal Konik wrote in a note to clients on Tuesday.

Wilson's decision to step out of the chairman role could eliminate the "too many cooks in the kitchen" scenario, he said, and give the new CEO more flexibility to make changes.

Potdevin told The Associated Press that he will be spend the first few months on the job learning about the business and establishing growth priorities for the company, which has been expanding abroad. He noted that products and quality will be a focus.

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