Lululemon Athletica CEO Out Amidst Multiple Claims of Misconduct

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Lululemon Athletica, Inc. CEO Laurent Potdevin has resigned effective immediately, with the yoga wear brand saying the former executive “fell short of ... standards of conduct”. LULU has not cited specific examples of Potdevin’s misconduct, but reports indicate the unprofessional behavior (unrelated to corporate finances or operations) was not limited to a single incident; though, no legal settlements have been paid and no criminal charges are pending. Executive Chairman Glenn Murphy will take over Potdevin’s role, until the board decides on a long-term replacement. LULU shares fell 3% (to $75) after hours on Monday.

Howie Long-Short: Potdevin was successful as CEO; helping the company through supply chain issues, growing its men’s business and building a presence within China, so this can’t be considered good news (though founder Chip Wilson may dispute that). Lululemon shares gained 21% in 2017 and have been trading just a few dollars off the all-time high ($81.92). The company did say Potdevin’s absence will not impact its 2018 earnings projections.

Fan Marino: LULU reported its “highest traffic” and “largest sales” ever on Black Friday and Cyber Monday, so January’s news that the company was raising sales forecasts (from mid-single digit to high-single digit growth YOY) for Q4 ’17; wasn’t exactly a surprise. Expectations are the company will post quarterly net revenue between $905-$915 million, equating to 15-16% YOY growth, when 4th quarter results are released on March 27th.

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