BOSS wanted for firm with tarnished reputation in troubled industry. On the face of it, the vacancy to become chief executive of Lululemon doesn’t ooze appeal. It is a clothing company, an industry that has been battered in recent years. And its previous two bosses have both left under a cloud.
In February its chief executive, Laurent Potdevin, resigned for conduct that the firm said fell short of its standards on integrity and showing respect for all employees. Industry observers considered his sudden departure to fit into a succession of corporate resignations sparked by the #MeToo movement against impropriety in the workplace. Mr Potdevin’s exit came three years after Lululemon’s founder, Chip Wilson, left the firm after more than a decade running it. Mr Wilson won notoriety for his on-air proclamation in 2013, after the company had to recall nearly a fifth of its yoga pants for being too sheer, that some women’s bodies “just don’t actually work” for the product because their thighs rub through the fabric.
Look closer, however, and the brand that Messrs Wilson and Potdevin left behind is booming. Demand is strong for “athleisure” products, meaning exercise clothes that double as running-about-town garb. Lululemon’s share price has more than doubled in the past 12 months. In the second quarter of 2018 gross margins expanded above 50% and sales at its 400-or-so stores surged by 25%, to nearly $650m. That is about $1,500 per square foot, one of the highest figures in retailing (Gap averages $340).
Three executives have been running the firm during the search for a new boss. Under them the Canadian company has embarked on a three-pronged growth strategy. First, it is branching out beyond its chiefly female customers and selling men’s athleisure wear; sales of these grew by double digits last quarter. Second, it is expanding beyond North America. Asian and European sales grew by 53% from the same quarter a year earlier; Lululemon will open 15-30 stores across both continents this year. Third, it is revamping its website. All of which should help it to reach a goal of $4bn-worth of revenue by 2020.
The next boss will nonetheless come under close scrutiny. Mr Potdevin’s successor, says Jennifer Redding of Wedbush Securities, an investment firm, should be a strait-laced professional willing to keep his or her head down. Others disagree. Lululemon’s customer base does not contain many wallflowers, points out Pam Quintiliano of SunTrust Robinson Humphrey, a bank. The brand needs a leader of either gender with a strong personality, she says. Above all, it needs a spell without bad publicity. According to one of its thousands-strong group of fitness and health professionals, who serve as brand “ambassadors”, the firm is just one more public misstep away from her calling it quits.
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