Lululemon Athletica Inc. Chief Executive Officer Laurent Potdevin (picture) abruptly resigned from the yogawear seller in the wake of unspecified misconduct, leaving a leadership vacuum and a swirl of controversy in its C-suite.
The 50-year-old also will resign from the board, Lululemon said, citing behavior that didn’t live up to its standards. The board, led by Executive Chairman Glenn Murphy, has already begun a search for a new leader.
The surprise move sent the shares down as much as 10 percent in late trading, dealing a blow to a company that had been on the upswing. Lululemon delivered a rosy earnings outlook in December, giving investors faith that the company had sidestepped a feared downturn in athletic-apparel sales.
“Lululemon expects all employees to exemplify the highest levels of integrity and respect for one another,” the Vancouver-based company said in a statement Monday. “Mr. Potdevin fell short of these standards of conduct.”
Lululemon limited the amount of detail about the misconduct to protect the privacy of those involved, people familiar with the situation said. The behavior spanned a range of incidents and involved multiple individuals, according to the people, who asked not to be identified because Lululemon is keeping the matter private.
The misconduct doesn’t have anything to do with the company’s finances or operations, they said.
Lululemon will make a lump-sum cash payment of $3.35 million to Potdevin as part of his exit. He’ll also receive $1.65 million over 18 months in equal monthly installments — beginning 60 days after his departure.
Murphy, who previously served as CEO of Gap Inc., is now tasked with steering the company during the upheaval. He already was serving as chairman, but now will add executive duties to the role, Lululemon said.
Three senior leaders also will take on more responsibilities. Celeste Burgoyne, executive vice president of the Americas, will help manage the sales channel and brand marketing. Chief Operating Officer Stuart Haselden will oversee finances, supply chain, employees and technology. And Sun Choe, senior vice president of merchandising, will work on product development, design and innovation.
The shares fell as low as $69.66 in extended trading before recouping some of their losses. They previously slipped 1.5 percent this year through Monday’s close, but they gained 21 percent in 2017.