Lululemon CEO Looking for an Exit

Shares of yoga-wear maker lululemon athletica (NASDAQ: LULU  ) resembled less a "downward facing dog," and more a dog that has received a swift kick to the gut on Monday, dropping nearly 13% in after-hours trading.

In part, this was a response to the company's Q1 earnings results, which showed 21% sales growth for the quarter, but only 9% better gross profits and flat earnings of $0.32 on a per-share basis. Also noteworthy, though, for its effect on the stock and on investors' psyches: The CEO is stepping down.

Simultaneously with reporting earnings, lululemon announced that longtime CEO Christine Day intends to resign just as soon as a replacement can be found. In a statement, the company noted that it is announcing Day's impending departure now "so the Board has the benefit of a healthy transition period, and can openly use that time for a thorough search for the next CEO." 

Meanwhile, lululemon says its business remains healthy with $340 million to $345 million in revenues expected in the current second fiscal quarter, and comparable-store sales expected to grow between 5% and 7% "on a constant-dollar basis." Earnings are expected to range from $0.33 to $0.35 per share, slightly up from Q1 levels.

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  • Report this Comment On June 11, 2013, at 1:09 AM, SwiperFox wrote:

    That company has nowhere to go but down. Good time to get out.

  • Report this Comment On June 11, 2013, at 4:10 AM, chris293 wrote:

    This one of many reasons that companies return less to the investors. Between gross income and net income the expenses of executive pay from the board of directors on down through the ranks of upper management sometimes, I repeat, sometimes is just a rip off. This is just an opinion that is not based on any facts here that I known of; however, I do feel that that the pay scale of many public companies is out of hand. But I do get to vote against pay increases especially if the company is losing money. Any investor needs to watch out for this bad action by some people.

  • Report this Comment On June 11, 2013, at 6:52 AM, MFMotleyStool wrote:

    chris293,

    If you really want to see what you are talking about in spades look at CRM. They give away more shares to insiders as part of their compensation than any company I can recall. No wonder they needed to get a $1B loan for acquisitions, which they just used up for ET and then some, because they are giving away all the free cash flow to insiders. I will not be surprised if there are lawsuits there at some point as the MOMO investors try to get their money back.

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