Dive Brief:

• Laurent Potdevin has resigned as CEO of Lululemon and as a member of the company's board, effective immediately, the athleisure retailer said on Monday.

• In a press release, the company alluded generally​ to his behavior but provided no details. “Lululemon expects all employees to exemplify the highest levels of integrity and respect for one another, and Mr. Potdevin fell short of these standards of conduct,” the company said, adding that it immediately began searching for a new chief executive. As part of the terms of his exit, Lululemon agreed to pay Potdevin nearly $3.4 million as a lump sum and another nearly $1.7 million, paid out monthly, after 60 days of his exit, according to a securities filing. 

• In the interim, three senior executives will take on additional responsibilities, reporting to Glenn Murphy, who has also taken a newly expanded role as executive chairman, according to the release. Those executives are: Celeste Burgoyne, executive vice president of American operations, who will oversee all channel and brand-facing aspects of the global business; Stuart Haselden, chief operating officer, who will oversee operational matters related to finance, supply chain, people and technology; and Sun Choe, senior vice president of merchandising, who will head product development, design, innovation and merchandising.

Dive Insight:

Potdevin’s departure comes as Lululemon appeared to be hitting its stride in its post-founder era.

In December the brand reported that third quarter net revenue rose 14% to $619.0 million and same-store sales rose 8%. That prompted the company to raise its outlook for the fourth quarter and full fiscal year. A month later, it reported strong holiday sales and raised expectations again. "We had end-to-end control of our every aspect of our business," Potdevin told analysts in December, according to a transcript from Seeking Alpha. During the call, he boldly predicted "a billion dollar digital business" by 2020.

Lululemon for a few quarters now has demonstrated that it's put previous quality, production and marketing issues behind it, expanding into men's and continuing innovation with patented fabrics.

Potdevin's departure undermines that momentum and recalls the damage the brand suffered a few years ago when founder Chip Wilson compounded quality headaches by saying that only women too big to wear his pants would have problems with them. 

"His innovative approach and his clear sense of Lululemon's values and essence is one of the reasons the company has enjoyed continued success, even while other sporting brands struggle to generate growth," GlobalData Retail Managing Director Neil Saunders said of Potdevin in an email, adding that the company's nebulous message about its reasons are also unhelpful.

"Lululemon owes it to investors and to customers to be clear about the reasons Mr. Potdevin was made to depart," he told Retail Dive. "As a company that prides itself on transparency and openness, we would expect it to have an honest conversation with stakeholders. Failure to do so will likely lead to speculation which could ultimately harm the brand."

The brand also must act quickly to find a replacement, he warned, saying that, while Murphy is 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."

"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," Saunders said.