Lululemon Announces Organizational Changes
Lululemon is back in the news as shares of the activewear company fall 5% in pre market. What is happing with the once loved company by investors? Let’s dive into it!
Lululemon announced plans to restructure. The company announced it as a series of updated and more integrated organizational changes. So to me, that sounds like a small restructure. Lululemon added to the announcement that Sun Choe, the Chief Product Officer has resigned and will be leaving the company later this month. The company also does not intend to replace the role. What will happened is that Jonathan Cheung, Global Creative Director will now report directly to CEO Calvin McDonald and gets most of the tasks previously executed by Sun Choe.
Nikki Neuburger will become Chief Brand & Product Activation Officer, she will oversee merchandising, and product operations in addition to her current responsibilities as Chief Brand Officer. Elizabeth Binder, Chief Merchandising Officer will now report to Neuburger.
So to summarize what is happening, Sun Choe is leaving the company and as a result, there are some switches to who reports to who, and some additions to responsibilities. These changes come as the company has hit some rougher waters and is trying to find ways to steer itself out of it. The stock is not particularly liking this development as it is another warning sign that the company is struggling to get grip on a difficult retail market. Lululemon athleticwear is expensive and during the last earningscall, the company already mentioned that it is navigating the challenges of retail. The departure of Sun Choe comes on top of rumors of lululemon wanting to acquire the Mexican franchisee. The company has not given a official statement about this as far as I am aware.
In addition, or reaction to this news, Wedbush lowered its price target for the stock to $397, from $492, but keeping the outperform rating as they say that the sell-off seems overdone.
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