Since January 2014, struggling yoga-apparel retailer Lululemon Athletica (NASDAQ:LULU) has been operating under the leadership of Laurent Potdevin. He is the retailer's third CEO in its 16-year history, succeeding founder Chip Wilson and Lululemon's most recent CEO Christine Day, who announced her resignation in June 2013 and stepped down from her role in February.
Lululemon's board of directors is confident that Potdevin is the best person to turn around the company's image after several publicity fiascos, which included Chip Wilson's off-handed comments as well as Lululemon's "see-through" yoga-pants malfunction. All of this aside, the real question is who is Laurent Potdevin and what does he bring to the yoga mat?
Many might not know that Potdevin has previous experience with other luxury brands. In fact, Potdevin started his career in 1991 at LVMH Moet Hennessy-Louis Vuitton, which manufactures and sells luxury goods such as perfumes, cosmetics, jewelry, and handbags, as well as wines and spirits. Later on, Potdevin began working for Burton Snowboards, where he held a number of positions throughout his 15 years with the company that included director of operations and chief operating officer, along with CEO and president from 2005 to 2010.
Burton Snowboards provided Potdevin with the opportunity and experience of managing an athletic brand. According to an investor relations report from Lululemon Athletica, "The business grew significantly under his leadership, expanding across product categories and creating international scale by always focusing on providing the best consumer experience." For this and other reasons, Lululemon's board is confident about its decision and believes Potdevin will do wonders for the company going forward.
Following his career at Burton, Potdevin became the President of TOMS shoes, a charity-focused shoe company that donates a pair of new shoes to a less-fortunate child when a customer purchases a pair of TOMS shoes. Potdevin left TOMS Shoes to assume his new role as Lululemon's CEO in January 2014. Michael Casey, former lead director of the board at Lululemon and now its chairman of the board, had this to say about Potdevin:
After a thorough search, Laurent emerged as the natural choice to lead our continued growth and global expansion. We believe lululemon will benefit from Laurent's leadership experience and proven track record of success in building global brands. He has more than two decades of experience at premium, technical athletic apparel, and lifestyle-centric retail companies, and his shared passion for driving innovative, community-focused brands makes him an excellent cultural fit for lululemon.
With Potdevin's proven past performance in taking brands to the next level in both product development and company expansion, it's apparent why Lululemon's board chose Potdevin to lead the retailer's future growth. Lululemon's board is hoping Potdevin will be just what the company needs to boost its image among consumers and ensure that positive messages carry forward to the customer and press. With all the problems and bad publicity that Lululemon has dished out to itself, can Potdevin really turn things around?
Turning things around
Investors should look to struggling department store retailer J.C. Penney (NYSE:JCP) to assess what could take place at Lululemon under new leadership. Both Lululemon and J.C. Penney have been captained by CEO's who were not the right fit, which hurt their sales growth and ultimately took their operations in the wrong direction. For instance, Lululemon's founder and former CEO Chip Wilson's long-line of off-handed remarks and twisted philosophies have driven some customers away.
When an interviewer asked Chip Wilson to comment on the company's see-through yoga pants that had to be recalled under former CEO Christine Day's leadership, he said "Quite frankly, some women's bodies actually just don't work for [the pants]. They don't work for some women's bodies". This remark outraged many of the company's customers since Wilson basically suggested that the yoga pants were meant for skinny women, not heavy women. J.C. Penney encountered its own set of problems after former CEO Ron Johnson took command, eliminating consumer coupons and eliminating certain brands from its sales floors.
With Mike Ullman back as the company's CEO, J.C. Penney is bringing back popular brands that were taken away under Johnson's watchful eye and printing coupons once again to give consumers a reason to come back to its stores. Mike Ullman may be able to boost the company's sales and profits; however, it is unlikely that they will return to where they were before Johnson. While Lululemon's situation is not as bad as that of J.C Penney, it desperately needs a strong leader with a vision that properly serves the customers who originally made it successful. Potdevin may just be what the doctor ordered to turn things around.
Like him or not, Laurent Potdevin seems to have the resume to get the job done. Lululemon has had a decent amount of success over the years because customers saw it as a premium lifestyle brand that offered quality products to yoga enthusiasts. In order to grow further, Lululemon needs to not only maintain this image but grow the brand further both internationally and by creating new products. Mr. Potdevin has a proven ability to grow a brand -- plain and simple. Therefore, as far as CEOs go, Lululemon's board of directors could have done a lot worse. Foolish investors would be wise to keep these notes in mind when evaluating the shares of Lululemon.