Lululemon Athletica Inc. (LULU:US) is looking to Laurent Potdevin, an outsider who hasn’t run a major retail chain, to lead the yoga-wear seller at a time when it needs to smooth out operations and expand its international presence.
Potdevin, 46, most recently president of TOMS Shoes Inc., will replace Christine Day as chief executive officer in January, Vancouver-based Lululemon said yesterday in a statement. Founder Chip Wilson will step down as chairman before the company’s annual meeting June.
Potdevin’s experience at TOMS, which gives a pair of shoes to a needy child for every pair it sells, makes him a cultural fit for a company like Lululemon, and his five years as CEO of Burton Snowboards suggests he understands manufacturing technical products, analysts said. Yet Lululemon’s challenges of branching out internationally and maintaining quality amid rapid sales growth may be on a scale he hasn’t seen before.
“The biggest issue is the supply chain,” Anna Andreeva, an analyst at Oppenheimer & Co. in New York, said in a phone interview. “Some criticism has been international expansion, or lack thereof. Definitely a lot of of their growth depends on international expansion.”
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She rates the shares market perform, the equivalent of a hold.
Lululemon got 95 percent of its $1.37 billion in revenue (LULU:US) in its most recent fiscal year from the U.S. and Canada. As of Aug. 4, the company had 26 stores in Australia and New Zealand plus a handful of showrooms elsewhere, compared with 200 locations in the U.S. and Canada.
The shares (LULU:US) fell 1.7 percent to $69.12 at the close in New York yesterday and have slid 9.3 percent this year, compared with a 26 percent gain in the Standard & Poor’s 500 Index.
International Business
Potdevin, who’s credited with building TOMS’s management team and expanding its international business, said he isn’t planning major changes to Lululemon’s strategy and called its products “outstanding and beautiful.” Still, the company has opportunities to innovate its “fit, function, fabric” while expanding into different categories and creating a better gender balance, he said.
“The way you continue to position the brand and keep its momentum is to continue to focus on great technical, beautiful products,” Potdevin, who started his career in 1991 at luxury-goods maker LVMH Moet Hennessy Louis Vuitton SA (MC), said in a phone interview. “I’ve been fortunate over the past 20 years to be involved with exceptional global, iconic brands or iconic brands on the way to being global. Lululemon has all the elements of being an iconic, global brand.”
Wilson Involvement
Potdevin may be expanding that brand with decreased involvement from the man who created it. Wilson, whose presence analysts said scared off previous CEO candidates, is ceding the chairman role to Michael Casey, the board’s lead director. Wilson still is Lululemon’s largest investor and will retain a seat on the board.
Wilson, 57, founded Lululemon in 1998 after taking a yoga class and used unconventional methods, such as local brand “ambassadors” and free yoga sessions, to amass a cult-like following in the U.S. and Canada. He owned about 28 percent of the shares outstanding, according to a September filing.
Omar Saad, an analyst at ISI Group in New York, said last month that the perception of Wilson’s involvement in the business may be hindering the search for Day’s successor.
Date: December 11, 2013