UPDATE 2-Lululemon CEO to step down, stock slumps

Mon Jun 10, 2013 6:11pm EDT
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By Susan Taylor and Solarina Ho

TORONTO, June 10 (Reuters) - Lululemon Athletica Inc , its fortunes dented by an embarrassing and costly recall of excessively see-through pants, said on Monday that Chief Executive Christine Day will step down once it finds a replacement.

Lululemon shares slumped as much as 15 percent after the news of Day's surprise departure, which came just three months after the company's second major quality issue in less than a year. Lululemon's chief product officer left in April.

"This was a personal decision of mine and, look, it's never perfect time to leave a company that you love. I've had a great run at Lululemon over the past five and-a-half years and I'm really proud of what the team and I have accomplished," Day said during a conference call with analysts.

Vancouver-based Lululemon carved out a lucrative niche with its high-end, fashionable yogawear, building a reputation for clothes that can withstand years of sweaty yoga classes and hundreds of washes.

It has said the recall of the stretchy black pants could cost up to $40 million profit this year, with most of the impact coming in the second quarter. But it reported a slightly better-than-expected first-quarter profit, as it brought its top-selling pants back onto store shelves.

Lululemon said it was announcing Day's departure now so that its board has time to conduct a thorough hunt for a replacement.

Day said in March that her team was "devastated" by the recall. The company's Taiwanese supplier said it had followed Lulu's specifications, and the retailer had apparently misjudged customer tastes.   Continued...