Lululemon seeks CEO who can help company grow and improve internal culture

April, 2018

In the Media

Many of the likely candidates are men, and that may not be ideal for a company with mostly female customers – especially given its gender-related missteps in recent years.

For the second time in four years, Lululemon Athletica Inc. is looking for a new fit.

The high-end yogawear brand is seeking a chief executive officer at a time of intense scrutiny, a situation similar to the challenge it faced heading into 2014. Back then, the company was coming off a controversy over pants that became see-through when customers bent over — a plight made worse by insensitive remarks from its founder.

This time around, it’s looking to rebound after inappropriate workplace behaviour by CEO Laurent Potdevin.

The executive abruptly left the company in February in the wake of misconduct that was said to include a relationship with a subordinate.

Lululemon’s board must now find a replacement who can help the Vancouver-based company grow internationally while rehabilitating its internal culture.

“The search will involve a far more extensive background check,” said Mike Magsig, managing partner at executive-search firm DHR International Inc. “Even an inkling of questionable conduct in the past is going to be viewed as a major risk to the corporation.”

The good news: Lululemon is in a strong position to attract a new chief. The company is posting rapid growth and its stock has jumped almost 80 percent in the past year, making it an enviable place to be in a shaky retail environment. That gives the board a chance to select someone with deep experience, said Pamela Quintiliano, an analyst at SunTrust Robinson Humphrey.

Many of the likely candidates are men, and that may not be ideal for a company with mostly female customers — especially given its gender-related missteps in recent years.

“If the best candidate is a woman, that would be phenomenal,” Quintiliano said. But a male CEO isn’t going to be a problem if he’s suited to the job, she said.

Here’s a look at several possibilities for Lululemon’s next leader.

Stefan Larsson

Larsson, who turns 44 this year, stepped down as Ralph Lauren Corp.’s CEO in 2017 after clashing with the company’s founder. Before that, he turned around Gap Inc.’s Old Navy business and helped attract younger shoppers interested in on-trend styles, including low-priced athletic wear. He also spent more than a decade at Hennes & Mauritz AB in various positions.

One thing that could give him a leg up: While at Gap, he worked alongside then-CEO Glenn Murphy, who is now serving as Lululemon’s executive chairman.

Carrie Ask

Ask, 48, leads Levi Strauss & Co.’s global retail business and works with its e-commerce team. Since 2016, she’s overseen several store openings and focused on bridging the brand’s online and brick-and-mortar presence.

The Navy veteran previously held leadership roles at Nike Inc., its subsidiary Converse Inc. and retailers such as Target Corp.

“She’s got every corporate check mark you want,” said Laurent Vasilescu, an analyst at Macquarie Capital USA.

David McCreight

McCreight, 55, had run Urban Outfitters Inc.’s Anthropologie business since 2011 — until the company announced Thursday he will leave his post on April 27. The executive has led an ambitious store expansion plan, aiming to entice shoppers with larger locations featuring bohemian-chic housewares and apparel.

Anthropologie caters to a female customer, a potential advantage transitioning to Lululemon. But he also has experience in sportswear, having served as president at Under Armour Inc.

Sam Sato

The 54-year-old Sato, currently CEO of Finish Line Inc., helped orchestrate a sale of the business to JD Sports Fashion Plc last month. He may become a free agent once that $558 million deal is completed — an event that isn’t expected until at least June.

Sato has led Finish Line since 2016, giving him a sports background — though the chain is more focused on Nike sneakers than yoga pants. He also spent more than 20 years in various roles at Nordstrom Inc.

Satish Malhotra

Malhotra is chief operating officer at Sephora Americas, the cosmetics chain owned by LVMH Moet Hennessy Louis Vuitton SE. A company veteran with almost two decades under his belt, he has been in his current position since 2016. With a business that’s hard to duplicate online, Sephora has weathered the threat from Inc. better than many retailers. And it’s set up shop inside other chains, such as J.C. Penney Co.

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