Sheer Yoga Pants Forces Lululemon CEO Christine Day To Step Down

PUBLISHED BY
Anna Domanska



TAGS:


8 years ago




Lululemon Yoga Pants

Lululemon Yoga Pants

Canadian sportswear retailer Lululemon Athletica – CEO, Christine Day is stepping down after the recent problems with a line of yoga pants that were inconsiderately see through.

The Vancouver based apparel company was founded by entrepreneur Chip Wilson in 1998 has customers for its pricey yoga and running gear who involve themselves in the company‘s free yoga classes and other events. But the company suffered a setback in March and had to apparently recall 17 percent of its popular Luon black yoga pants after reports that the pants were too revealing. It was an image hit which also hindered the first quarter earnings.

Day took over as the CEO in January 2008 after a long run at Starbucks, where she held a post at their Asia Pacific group. In a statement, Day said that her leaving was a personal decision and ‘It is the right time to bring in a new CEO’. She also said ‘Plans have been laid for the next five years and a vision set for the next ten’. The company said Day would step down from her role after a successor is named.

Lululemon stock was down about 17 percent to $68.95 after hours trading following Day’s announcement resulting in a loss of over $500 million for Chip Wilson.  Sam poser equity analyst at Sterne Agee and Leach ,downgraded Lululemon to neutral from buy and cut its 12 month price target to $75 from $90.Lululemon is trading at a very high multiple  with the stock trading at 37 times current earnings  compared to the S & P 500 Retailing Index which trades 25 times earnings.

Lululemon also plans to delist its stock from the Toronto Stock Exchange on June 24th because the low trading volume there didn’t vindicate the administrative expenses related to its listing and its stock on the NASDAQ exchange. Shares will continue to trade on NASDAQ.

Day had guided the company through a period of explosive growth and this surprise exit is seen as a blow to the company by analysts. Of late even without the see through mishap of the yoga pants recall, Lululemon was facing competition from companies like Gap’s Athleta brand. Even some of Lululemon’s loyal shoppers have accused Day of spoiling their favourite brand. Now that Day has decided to step down Lululemon finds itself in a dilemma as it searches for a new CEO. The new CEO’S focus will be on product quality issues and finding a strategy to improve and increase product offerings. The recent developments may weigh on the stock in the near term, though it’s a wait and watch situation.

Avatar
Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Recent Posts

Morgan Stanley raises CEO James Gorman’s pay to $33 million

Morgan Stanley raises CEO James Gorman’s pay to $33 million

James Gorman’s salary ($33 million) is comprised of four parts: a base salary of $1.5 million; a deferred equity award of $7.875 million; ...
6 hours ago
IBM Q4 Profit Up, Banks on Cloud and AI For 2021

IBM Q4 Profit Up, Banks on Cloud and AI For 2021

IBM’s revenue is expected to rise in 2021 and generate adjusted free cash flow of $11 billion to $12 billion for the year. ...
23 hours ago
‘World first’: Google threatens to disable search in Australia over proposed new law

‘World first’: Google threatens to disable search in Australia over proposed new law

Google has been at odds with the Australian Government since the latter proposed the ‘world first’ law to make tech companies pay publis...
1 day ago
FCC rejects petition to stay Ligado Network’s 5G rollout

FCC rejects petition to stay Ligado Network’s 5G rollout

The Federal Communications Commission rejected by a vote of 3-2 on Tuesday to freeze the rollout of Ligado Networks’ nationwide mobile bro...
2 days ago
Oil prices rise on hopes of big stimulus money

Oil prices rise on hopes of big stimulus money

The crude oil prices showed an upswing with Brentwood going up to $56.08 a barrel and the US West Texas Intermediate crude oil selling at $5...
2 days ago
Kia bags Apple Car production deal

Kia bags Apple Car production deal

Apple Inc.’s much-coveted Apple Car could be produced by Kia Corp. at the latter’s manufacturing facility in the United States. The Sout...
2 days ago