Lululemon Athletica (LULU) announced today in its quarterly earnings release that longtime CEO Christine Day will be stepping down once the company finds a new chief executive.
"Plans have been laid for the next five years and a vision set for the next ten," said Day in a statement. "Now is the right time to bring in a CEO who will drive the next phase of lululemon's development and growth."
Day has presided over a period of growth for the Canadian yoga apparel company, and this quarter it saw net revenue increase by 21% and same-store sales rise by 7%. Net income for the quarter rose slightly, from $46.6 million to $47.3 million.
That's a solid quarter, but still off the company's usual sales and profit growth results.
The reason, of course, is that the quarter was marred by a voluntary recall of black yoga pants after they were found to be too sheer. That has generated some embarrassing headlines, but the company has won praise for taking responsibility for the fiasco and responding promptly to customer complaints. The company also touted the fact that it replaced the offending pants in stores within 90 days.
Day's departure will undoubtedly be linked to the see-through pants scandal, though investors don't seem to be holding her responsible. Shares plunged more than 10% in after-hours trading, and given the quarter's financial results were about in line with what the company projected when the recall was announced in March, it's hard to see the dip as anything but a response to Day's departure.
The good news is that Day says she'll remain on as CEO until the search committee finds her replacement, so Lululemon fans and investors can be assured of a steady hand at the top for the time being.