Lululemon must look for cultural fit in CEO search
By Susan Taylor and Solarina Ho
TORONTO (Reuters) - Premium workout wear maker Lululemon Athletica Inc LLL.TO (LULU.O: Quote) will not have an easy job replacing Chief Executive Christine Day, the company's public face who built up the brand to be an international powerhouse over the past half decade.
Day, who announced her surprise departure plans after markets closed on Monday, was also behind Lulu's blistering growth rate and its transition from yummy mummy niche to broader, multi-sport appeal.
But the costly quality control problems that tarnished the end of Day's tenure will also dog her successor even as he, or perhaps more likely she, attempts to adapt to a distinctive Lululemon culture that prides itself on strong community ties and a connection with its fiercely loyal customers.
"Most CEO searches fail because there wasn't enough analysis and assessment around fit, especially going into a strong corporate culture like Lululemon," said Bob Damon, president of Americas at executive search agency Korn/Ferry International.
"Just because someone was successful at the Gap, it doesn't mean that they will be successful at Lululemon. It's not about what you've accomplished as a CEO, it's about how you have accomplished it."
Lululemon carved out a lucrative niche with its high-end, fashionable yogawear, reporting quarter after quarter of stunning sales and profit growth.
But a March recall of excessively see-through black pants proved a huge blow, and its latest tepid sales growth forecasts are well below year-ago levels.
The stock sank nearly 18 percent to close at $67.85 on the Nasdaq and C$69.22 in Toronto on Tuesday, its lowest level since April, on concern about the succession plan. Continued...