Lululemon chief executive Laurent Potdevin has resigned after over four years at the helm, amid unspecified "conduct" problems, the apparel company said Monday.
The retailer made the announcement after the stock market closed, and said the move was effective immediately.
"Lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short of these standards of conduct," the company said in a release without elaborating.
Potdevin also stepped down as a member of the Vancouver-based company's board of directors.
"While this was a difficult and considered decision, the board thanks Laurent for his work in strengthening the company and positioning it for the future," said Glenn Murphy, the company's executive chairman of the board.
"Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organization. Protecting the organization's culture is one of the board's most important duties," Murphy said.
$5M separation agreement
Potdevin was appointed CEO in December 2013.
According to a filing with the U.S. Securities and Exchange Commission, Lululemon has reached a separation agreement with Potdevin dated Feb. 2. The company has agreed to give him a lump sum payment of $3,350,000 US "as soon as practicable" after the separation date, plus another $1,650,000 US to be paid out in monthly payments over a period of 18 months.
Under the deal, Potdevin cannot sue Lululemon and must co-operate with the company, among other conditions.
The company said it has begun hunting for a new top executive, adding that Murphy and three other senior executives will take on added duties in the interim.
Problems for brand?
Analyst Neil Saunders, managing director of GlobalData Retail, called on the company to be more clear about the reasons for Potdevin's departure, and he called the loss of the executive "a blow to Lululemon."
"During his tenure, Mr. Potdevin oversaw the steady expansion of Lululemon through both calm and rough periods in the athleisure market," Saunders wrote Monday. "His innovative approach and his clear sense of Lululemon's values and essence is one of the reasons the company has enjoyed continued success, even while other sporting goods brands struggle to generate growth."
David Ian Gray, a retail analyst with DIG360, says while the low-profile Potdevin's departure may not hurt the company in the short term, the details of what prompted his ousting could have longer-term impacts.
"Lululemon is really built so strongly on a foundation of values and authenticity," he said. "It's not just words: it enables people in that company to be really digging in and steer in a right direction.
"If the staff lose faith in leadership that could have a ripple effect through the organization that could be detrimental."
In conjunction with the announcement of Potdevin's resignation, Lululemon reaffirmed the financial guidance it gave on Jan. 8, that it said "reflects the ongoing momentum of the business."
The business said it remains on track to achieve $4 billion in revenue in 2020.
Shares of Lululemon closed down 1.5 per cent on Monday, finishing at $77.41 US on Nasdaq. In after-hours trading, the stock slipped three per cent.