Lululemon Athletica Inc. CEO Laurent Potdevin has abruptly resigned, as the fitness-clothing company said the executive "fell short" of its standards of conduct.
Mr. Potdevin resigned Feb. 2. Lululemon announced the news late on Monday.
The specific reasons for Mr. Potdevin's resignation, which includes stepping down from Lululemon's board of directors, were unclear. The company cited its commitment to the "highest levels" of integrity and personal respect. A Lululemon spokesperson said the company would not comment further "out of respect for the individuals involved."
A person familiar with the matter said there were several instances in which Mr. Potdevin didn't meet Lululemon's conduct standards. But the person wouldn't say whether Mr. Potdevin's resignation was in any way related to the #MeToo movement. The issue of the treatment of women in the workplace has been prominent since last fall, and numerous high-profile men in an array of professions have stepped down because of allegations of misconduct.
Mr. Potdevin joined the company four years ago, as founder Chip Wilson gave up his position as board chairman. Mr. Wilson retreated amid controversial statements at the time about women's body sizes. Mr. Potdevin, who previously had a 15-year tenure as chief executive of Burton Snowboards Inc., oversaw a strong, but choppy period in Lululemon's history.
The stock rose and fell sharply several times but, over all, has climbed about two-thirds from when he started, close to a record high.
While the Vancouver company searches for a new CEO, it will be led by Glenn Murphy, Lululemon's chairman, whose new title will be executive chairman. Three other executives are also taking on new responsibilities. Mr. Murphy joined the board last April. He was previously chairman and CEO of clothing retailer Gap Inc. from 2007 through 2014.
Mr. Murphy, in a statement, spoke of Lululemon's company culture in the late-Monday announcement of Mr. Potdevin's resignation.
"Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organization," Mr. Murphy's statement said. "Protecting the organization's culture is one of the board's most important duties."
The vague nature of Lululemon's statement will hurt the brand, said retail analyst Neil Saunders of consultancy GlobalData Retail.
"You can't just put out a statement and say he fell short," Mr. Saunders said. "It's not about being nosy or salacious gossip. It's obviously serious. They pride themselves on being open. People will not rest until they come clean. It's a massive PR misstep."
Mr. Saunders noted that while a connection with #MeToo was speculative, it was another reason Lululemon should be more upfront about the reasons behind Mr. Potdevin's resignation, especially considering that the company's brand is in part centred on strong women.
BMO Nesbitt Burns analyst John Morris said Mr. Potdevin's departure could be "modestly disruptive" to Lululemon's business, but added that Mr. Murphy is "highly qualified" and his Gap experience will help as interim Lululemon boss.
Mr. Wilson, the company founder who is still a large shareholder, had battled with Lululemon in recent years when Mr. Potdevin was at the helm. On Monday, Mr. Wilson said in a statement that Mr. Potdevin's resignation "marks an opportunity to secure a culturally aligned leader" that better represents the company's character.
In agreeing to his resignation, Mr. Potdevin will receive US$3.35-million in a lump-sum cash payment, Lululemon said in a regulatory filing on Monday. Mr. Potdevin will receive an additional US$1.65-million over 18 months in equal monthly instalments, starting in April.
Mr. Morris noted the separation agreement between the company and Mr. Potdevin includes a 24-month, non-solicitation agreement. This means Lululemon has a low risk of losing other top executives, according to Mr. Morris. "Retaining top talent should ease the relative volatility compared with other unexpected CEO departures," Mr. Morris said in a note to clients.
The three Lululemon executives whose roles have expanded are: Celeste Burgoyne, executive vice-president of the Americas; Stuart Haselden, chief operating officer; and Sun Choe, senior vice-president of merchandising.
"We believe this trio of leaders will take Lululemon from strength to strength," Mr. Murphy said in his statement.
Mr. Saunders, the retail analyst, said Mr. Potdevin's resignation is a negative for Lululemon's business outlook.
"It's bad news, regardless of what is alleged to have happened," Mr. Saunders said. "This was a successful CEO."
Lululemon on Monday reiterated its goal to reach US$4-billion in annual revenue in 2020. The number was put forth a month ago.
Lululemon has said its fiscal 2018 net revenue – for the year ended Jan. 28, 2018 – would be about US$2.63-billion, up about 12 per cent from US$2.34-billion in fiscal 2017.