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Lululemon Athletica Inc. named Heidi O’Neill its new chief executive on Wednesday as the athletic retailer looks to move beyond a turbulent period of slowing growth and investor unrest.
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O’Neill, who was most recently Nike Inc.’s president of consumer, product and brand, will take over as permanent CEO on Sept. 8, the company said in a statement. Calvin McDonald, who had led Lululemon since 2018, left his post in January and went on to lead a beauty business.
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Lululemon shares dropped as much as seven per cent in postmarket trading. The shares had fallen more than 21 per cent so far this year as of Wednesday’s close.
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“What drew me to this role — and what I believe is Lululemon’s greatest opportunity — is the intersection of extraordinary product, design and community,” O’Neill said in a letter sent to Lululemon employees reviewed by Bloomberg News.
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After O’Neill steps into the CEO job, Lululemon’s current interim leaders, Meghan Frank and André Maestrini, will return to their previous roles, board chairman Marti Morfitt said in a separate letter reviewed by Bloomberg.
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“We are seeing progress as we strengthen our brand, re-accelerate our growth and create value for our shareholders,” Morfitt added.
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O’Neill arrives with a series of fires to put out. Recent product mishaps, including selling leggings that were see-through, and a disappointing sales outlook, have left investors questioning whether the company can pull itself out of a rut.
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The company has lost dominance in the athleisure category, one it helped to create, and ceded share to upstarts like Alo Yoga and Vuori. In its last quarter, Lululemon reported its slowest sales growth since the company went public in 2007.
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Elliott Investment Management has built a stake of more than US$1 billion in the company. Jane Nielsen, a former Ralph Lauren Corp. executive, was Elliott’s preferred candidate for Lululemon’s top job.
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Lululemon’s founder, Chip Wilson, who no longer has a formal role with the company but is one of its biggest shareholders, has also publicly criticized the company and pushed for changes on its board.
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While at Nike, O’Neill was considered to be an internal prospect to replace former CEO John Donahoe, Bloomberg Businessweek previously reported.
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