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Lululemon Athletica Inc. is putting its trust in a former Nike executive after facing months of backlash about the company’s management and performance.
The Vancouver-based athleisure retailer announced Wednesday that Heidi O’Neill will become its next chief executive officer on Sept. 8, when she will also join its board.
The company said she was chosen for the role because of her experience, “success delivering breakthrough ideas and initiatives at scale, and her ability to be a knowledgeable change and growth agent.”
“Heidi is an inspiring leader and proven, consumer-driven brand strategist, with a rare ability to both imagine a new future for a brand and to create the structure and processes to deliver on that vision,” Lululemon executive board chair Marti Morfitt said in a statement.
Lululemon CEO Calvin McDonald is stepping down in January. This comes after the company witnessed a near 50 per cent share fall in the last year. The Canadian-born executive’s announcement sent Lululemon’s shares surging roughly 10 per cent in extended trading on Thursday.
Her appointment comes amid a turbulent chapter for Lululemon, the yoga pants juggernaut that’s been inundated with competition from trendy upstarts and massive brands like the one O’Neill used to run.
Shareholders, including Lululemon’s estranged founder Chip Wilson, started pressing last year for the company to appoint new board members that would better address rivals, its sagging share price and a product mix some felt was getting stale.
Wilson, who has not worked for Lululemon for years but still holds some of its stock, wanted former On Holding AG co-CEO Marc Maurer, former ESPN chief marketing officer Laura Gentile and ex-Activision CEO Eric Hirshberg named as board members.
His spokesperson did not immediately respond to a request for comment about O’Neill’s appointment Wednesday.
Their calls for action came after Lululemon CEO Calvin McDonald announced in December that he would step down.
When he left in January, chief financial officer Meghan Frank and chief operating officer André Maestrini became interim co-CEOs as the search for McDonald’s successor continued.
They will continue to share the top job until O’Neill starts, when they will return to their other executive roles, Lululemon said Wednesday.
The company credited O’Neill with helping to grow Nike from a $9-billion business into a $45-billion athletic brand during her 25 years at the firm.
It said she’s also spent time in marketing for the Dockers brand at Levi Strauss & Co. and on the boards of Spotify Technology and Hyatt Hotels.
O’Neill said in a statement that she sees Lululemon as “an iconic brand with something rare: genuine guest love, a product ethos rooted in innovation, and a global platform still in the early stages of its potential.
“My job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” she said.
Safe choice, analyst says
O’Neill was not on the list of executives Wilson was prodding Lululemon to hire.
The company has so far not heeded his advice, instead appointing former Levi Strauss & Co. president and CEO Chip Bergh to the board.
It also alleged Wilson has prevented the company from interviewing his suggested board members by demanding the company sign an agreement before it proceeds. It has not outlined what terms it alleges Wilson is requesting.
Neil Saunders, managing director of consulting and analytics firm GlobalData, said he suspects some will see O’Neill “as something of a safe and traditional choice,” given that “a lot of cultural change is needed at Lululemon in order to improve performance.”
He, however, thinks she is an “obvious choice” because of her experience in activewear and on the boards of companies entrenched in customer service.
“Despite its lack of growth in North America over recent years, Lululemon is not a terrible business: share losses have been modest, and it is still generating growth,” Saunders said in a note to investors.
“The challenge will be to inject more energy and restore Lululemon as one of the leaders in terms of product innovation. This can be accomplished under O’Neill.”
