UPDATE 3-Lululemon aims to move past gaffes with new CEO, chairman
TORONTO, Dec 10 (Reuters) - Lululemon Athletica Inc named a new chief executive on Tuesday and said founder Chip Wilson will step down as chairman, as the upscale yogawear retailer tries to expand globally and put a series of embarrassing quality issues and other gaffes behind it.
Lululemon said Laurent Potdevin, most recently president of trendy footwear brand TOMS Shoes, will replace Christine Day as CEO in January, and emphasized Potdevin's role leading TOMS' global expansion.
Vancouver-based Lululemon, in the early stages of a push into Europe and Asia, was forced to recall some of its signature black stretchy pants in March because they were see-through.
Potdevin will have to deal with supply chain problems that caused the multimillion-dollar recall, fend off tough competition and shore up Lululemon's reputation.
"This company has jeopardized its long-term relationship with its customers over the last year, via some product quality issues, via some board communication by the founder," said Credit Suisse analyst Christian Buss.
"What I'll be looking for are signs they can re-engage their customers in a positive way."
Closely held TOMS, which gives shoes to a needy child for every pair it sells, has grown rapidly since it was founded in 2006. Potdevin, also the former CEO of Burton Snowboards, started his career with luxury group LVMH.
On a call with analysts and investors, incoming chairman Michael Casey highlighted Potdevin's experience with both athletic clothing and luxury goods.
Investors did not cheer immediately. Lululemon's usually volatile shares, off nearly 15 percent since June when Day announced her intention to quit, rose 0.2 percent to $70.46.
Wilson, who founded Lululemon in 1998 and owns about 9 percent of the company, will step down as non-executive chairman prior to Lululemon's annual meeting in June. He will remain on the board.
Michael Casey, a former Starbucks Corp executive and lead director of Lululemon's board for the past six years, will take over as chairman.
Wilson caused a furor last month when he said Lululemon products were wrong for certain body shapes.
Wilson has said he chose the name "Lululemon" because the L sound is not in the Japanese language. "It's funny to watch them try to say it," he said in a 2004 profile in the National Post Business magazine.
"We view Wilson's departure as chairman as a positive because he is obviously considered something of a loose cannon who may have been alienating consumers and certainly seems to have had that effect on some investors," Faye Landes, an analyst with Cowen and Co, said in a research note.
Credit Suisse's Buss said he was pleased to see control consolidate under one executive who has done a good job managing "cult brands." But he said Potdevin's lack of significant experience operating stores warranted caution. TOMS and Burton products are largely sold by other retailers.
Day surprised investors when she said she would leave once a replacement was found. She led Lululemon as it became a major retail player, growing at a blistering pace in the United States, a market few Canadian retailers have cracked.
Lululemon's chief product officer also left in the wake of the recall.
The company was hit with a U.S. lawsuit in July that accused it of defrauding shareholders by hiding defects in the pants and concealing talks that led to the departure of Day.
The company has said it did not try to hide the problem, and argued in a recent court filing that the suit should be thrown out.
Lululemon is due to announce third-quarter results on Thursday. In September, it trimmed its forecast for full-year sales and profit.