Lululemon CEO resigns following Q1 results

VANCOUVER, British Columbia — Lululemon reported results for the first quarter ended May 5, but the news of the day was CEO Christine Day's resignation after five and a half years.

Day will officially step down once the board names a successor. The board has formed a search committee and enacted its CEO succession plan.

“Being a part of Lululemon for the past five and a half years has been an incredible journey. I am proud of building a world-class team that has produced one of the best growth, brand and profit stories in retail,” said Day. “Plans have been laid for the next five years and a vision set for the next ten. Now is the right time to bring in a CEO who will drive the next phase of Lululemon’s development and growth. I will continue to actively lead the organization while the board searches for a new CEO, and will work to ensure a smooth transition.”

“Christine has been an exceptional leader for Lululemon, successfully embracing the culture while growing the business and returning value to all of our stakeholders including our guests, employees, partners and shareholders,” added Chip Wilson, chairman of board. “I thank Christine for her leadership, contributions and commitment to Lululemon. I am confident that we will find the right person to lead this strong team and continue to build on this excellent foundation.”

Lululemon's net revenues for the first quarter ended May 5 was $346 million, an increase of 21% from $285.7 million in the first quarter of fiscal 2012. The company's comparable-stores sales for the first quarter increased by 7% on a constant-dollar basis.

“The past quarter has been one of the most important in our company’s history," said Day regarding the company's financial results for the quarter. "While we regret that we had quality issues with our black Luon [yoga pants] we are proud of the organization’s ability to get Luon delivered back into our stores within 90 days of having pulled it from our line, all the while keeping our guests happy and engaged with the brand.”

Day is referring to the company's Luon black yoga pants which were too sheer and had to pulled off shelves back in March and which the company began carrying again a week ago.

Direct to consumer revenue increased 40% to $54 million, or 16% of total company revenues, in the first quarter of fiscal 2013, an increase from 14% of total company revenues in the first quarter of fiscal 2012.

Gross profit for the quarter was $171 million, an increase of 9% from $157 million for the first quarter a year prior. The company's gross profit includes a provision of $17.5 million for inventories charged to cost of sales related to the black Luon yoga pants snafu, and as a percentage of net revenue gross profit decreased to 49% for the quarter from 55% in the first quarter of fiscal 2012.

The company ended the quarter with 218 stores in North America and Australia.