It seems like not a day goes by without a Lululemon Athletica headline in national media. Whether or not you buy into the thinking that any press is good press, you have to admit that the recent headlines are pretty compelling. A controversial comment by the Founder. Ensuing media backlash. Resignations. Newly appointed CEO. It all makes for wicked dinner conversation.
A lot of people will directly correlate Chip Wilson's decision to stand down as Non-Executive Chairman to comments he made during the Bloomberg News interview in November. Wilson garnered quite a bit of attention when he redirected a question about the quality of the fabric of Lululemon pants, suggesting that they may not be appropriate for all women's body types. His resignation will be called a necessity, a firing, and a forced move.
This is an over-simplified view of what is really happening at Lululemon. The fact of the matter is that the relationship between a Board of Directors (BOD) and the CEO is an important one. A BOD represents the shareholders; its members have a legal and fiduciary responsibility to steward the company above and beyond their own personal agendas. With the announcement of Laurent Potdevin as CEO this month, the Board must above all else ensure he has the runway to helm the company.
Fortune Magazine recently chronicled the poor relationship between Wilson and outgoing CEO Christine Day. To me, this is much more of a factor in Wilson's decision to resign than any of his comments about customers. Potdevin must be given every opportunity to be successful. He has big shoes to fill with Day's success as a shareholder-focused CEO. The ownership base and the Board have big expectations for continued shareholder results.
What I thought was telling in that Bloomberg interview was that Chip and Shannon were there to promote a new brand called Whil.com and that Wilson expressed that his new found lifestyle was more of a priority to him then overseeing lululemon. What lululemon and Laurent Potdevin need now is an internally focused Board Chairperson that is committed to results. I believe Chip feels now is the time for others to steward the company into the future. Hence his resignation.
So is all news good news for Lululemon? Bloomberg recently directly correlated negative headlines to declining share price. What they noted was that with every negatively slanted article or story, the stock price took a hit. Recently all news is not good news. If you are a shareholder, as I am, you are forced to take the long view. The next question is whether or not these headlines will impact holiday sales and repeat customer visits.
It wasn't too long ago that Lululemon was a press darling and could do no wrong. From the naked Robson Street opening to store openings in Toronto and throughout the country, the press was buying what the company was selling. While I was at the company, we spent no money in traditional advertising. Word of mouth and guerilla marketing were our focus. And headlines followed.
It seems like once the company's success achieved stratospheric levels, both the scrutiny and patience wore thin. Not unexpected. Not unfortunate. Just higher stakes in the game of business.