- Lululemon CEO Laurent Potdevin is resigning, effective immediately.
- The retailer said Potdevin "fell short of ... standards of conduct" to respect employees and show integrity.
- Lululemon's board of directors has started searching for a new global CEO.
Lululemon said Potdevin "fell short of ... standards of conduct" to respect employees and show integrity. Meanwhile, the company's board of directors has started searching for a new global CEO. Potdevin will also be removed from his position on the board.
"While this was a difficult and considered decision, the Board thanks Laurent for his work in strengthening the company and positioning it for the future," Glenn Murphy, executive chairman of Lululemon's board, said in prepared remarks.
"Culture is at the core of lululemon, and it is the responsibility of leaders to set the right tone in our organization," he added. "Protecting the organization's culture is one of the Board's most important duties."
The company declined to comment further on why Potdevin had been removed from Lululemon so abruptly, having served there since January 2014. Prior to joining Lululemon, Potdevin was president of Toms Shoes and CEO of Vermont-based Burton Snowboards.
Lululemon shares were falling more than 3 percent after market close Monday on the news.
Lululemon has promoted three members of its management team — Celeste Burgoyne, Stuart Haselden and Sun Choe — to oversee more day-to-day operations, marketing, e-commerce growth, product innovation and supply chain enhancements.
"We believe this trio of leaders will take lululemon from strength to strength," Murphy said, as the company searches for a new leader.
While the underlying motive remains unclear, some see Potdevin's departure as a "blow to Lululemon," especially in today's tumultuous retail environment.
"Although we see Executive Chairman Glenn Murphy as a capable pair of hands in the short term, Lululemon needs a CEO to guide it as it expands overseas and tries to make further gains in its home market," GlobalData Retail Managing Director Neil Saunders said. "It is crucial that the right person is selected, but it is equally [important] that the task is undertaken with urgency so that Lululemon doesn't lose momentum."
Lululemon is offering limited details at this point to protect the privacy of those individuals involved with Potdevin, people familiar with the situation told CNBC. His behavior wasn't limited to one incident, added the people, who asked to not be named because the matter is being kept private.
Late last year, CNBC reported on an explosive lawsuit that said a Lululemon store employee was raped by a supervisor at his home after the company "created the perfect environment for a sexual predator."
The suit alleged that Lululemon was long aware that supervisor Phillip Silva had a history of being "sexually inappropriate" with female employees — and actually transferred him from one store to another because of that — before he allegedly raped a female worker at his home in April 2016.
When asked about those allegations in December, a Lululemon spokesman told CNBC: "We are committed to doing everything we can to ensure that employees come to work each day in safe environments where they are empowered to speak up."
Potdevin had recently been spearheading Vancouver-based Lululemon's growth in the men's category, as well as the company's rapid expansion into China. In leaving the CEO role, he is set to receive a lump-sum cash payment of $3.35 million, along with $1.65 million paid in equal installments over 18 months.
The company said Potdevin's departure won't impact the retailer's financial outlook for fiscal 2018.
As of Monday's market close, Lululemon shares have climbed about 16 percent from a year ago.
—CNBC's Dan Mangan contributed to this report.