3 Things You Should Know About Lululemon's New CEO
Yoga-apparel brand Lululemon Athletica named a new CEO this week as controversial founder Chip Wilson stepped down from his role. Laurent Potdevin takes the reigns next month from Christine Day, who leaves the company after several years of service (and in-fighting with Wilson).
What do investors need to know about Lululemon's new CEO?
1. Experienced in athletic retailing
Laurent Potdevin spent 15 years as the CEO of Burton Snowboards, which specializes in athletic equipment but does include apparel in its offerings. The Vermont-based company was founded in 1977 and has grown over the years through careful inventory control and professional athlete partnerships that have turned Burton into an aspirational brand. And aspirational branding is right up Lululemon's alley.
The athletic experience should transfer well to Lululemon -- as should Potdevin's experience dealing with controversy. Burton received backlash in 2008 concerning a series of snowboards depicting nude Playboy models. Potdevin issued a statement defending the art as freedom of expression and stated that the boards in no way condoned violence against women.
What isn't in question is Potdevin's influence at Burton during his time there. In the press release announcing Potdevin's resignation in 2010, company founder Jake Burton had this to say:
"Laurent has helped steer Burton through some very challenging periods. And this transition is a lot easier knowing that he leaves Burton at a time when our focus, performance and team are more solid than ever."
2. Fresh from a socially conscious brand
Potdevin's most recent career stop was a more than two-year stint as president of Toms, the socially-conscious shoe company that donates a pair of shoes to an impoverished child for every pair purchased. Valid arguments exist as to whether the shoe drop-offs do more harm than good to impoverished communities, but Toms still has a decent reputation overall despite its occasional misstep. And Toms also has the whole aspirational branding thing happening.
But Toms CEO Blake Mycoskie admitted in a Hypebeast interview that he hired Potdevin and then didn't allow him to do anything for the first 16 months. So how much Potdevin actually learned on the job at Toms -- aside from learning to deal with a founder with a strong personality -- is up for question. But that founder-coping could come in handy at Lululemon if Chip Wilson doesn't step as far to the side as he should.
3. He's coming aboard with reasonable payment terms
According to an SEC filing, Laurent Potdevin will receive a base salary of $900,000 plus a $200,000 starting bonus and $2 million in stock. Potdevin can qualify for a performance-based salary up to 150% times his base pay and has the option to purchase up to $675,000 in additional Lululemon shares. If he stays with the company longer than two years, Potdevin becomes eligible for an additional $1.6 million retention bonus.
Lululemon could've handed Potdevin a golden goose and it would've seemed a reasonable offer. Investors were less than amused when Christine Day announced her resignation--to the tune of a 15% share drop. And Chip Wilson's foot-in-mouth syndrome has injured the company's reputation further in the interim.
But in order to earn his pay and position, Potdevin will need to hit the ground running and show a commitment to both quality and winning back customers alienated by Wilson's comments. And the process needs to happen quickly as competitors nip on Lululemon's flexible heels.
Gap is continuing to move further into the athletic-clothing sphere with plans to have 65 Athleta stores opened by year-end.The company already has a solid reputation with shoppers; Gap's comparable-store sales were up 1% in the third quarter, whereas stores like Abercrombie & Fitch and Aeropostale reported double-digit drops. And the lower price points at Athleta could entice a broader range of customers than Lululemon.
Foolish final thoughts
Laurent Potdevin has a lot to prove in a small time frame. His job will prove easier if Chip Wilson stays in the background. But the main task is proving that Lululemon can move past the quality issues.
Want to learn more about great growth stocks?
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen 6 picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.
The article 3 Things You Should Know About Lululemon's New CEO originally appeared on Fool.com.
Brandy Betz has no position in any stocks mentioned. The Motley Fool recommends Lululemon Athletica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.