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Lululemon's CEO, Laurent Potdevin, abruptly resigned amid a vague company statement claiming there was some misconduct involving employees. Details are few, but, from what is known, one thing is for sure, Potdevin doesn't seem to be facing any real consequences. To exit, Potdevin will receive nearly $5 million.
Unfortunately for Lululemon, despite the company seeming to pull out ahead of a public scandal, their stock price took a hit on the news. As noted by Bloomberg, the company has recently suffered some rather high turnover in management. Potdevin had only taken over as CEO in 2014.
Getting Ahead of Bad PR
Lululemon is no stranger to bad public relations. The company's founder found himself in rather hot water a few years back after saying that their clothing wasn't made for all body types, or something to that effect. That controversy occurred right around the same time it was discovered that certain Lululemon yoga pants had a defect that made them see through when stretched a little too far. It was an odd couple of controversies, but most of it had blown over and the brand was once again synonymous with overpriced yoga gear.
And now, it would seem that by having Potdevin resign and announcing that the resignation was misconduct related, Lululemon is trying to protect its public image. Given the number of high profile individuals and cases involving sexual misconduct, it makes sense for companies to do their best to get ahead of potential negative PR by being proactive. Having Potdevin resign before there are any public allegations may create questions, but it also sends a rather clear message.
Paying for It
Lululemon is certainly paying for their CEO's misconduct. However, bolstered by the data of their last scandal, and knowing the demographics off their customer base, the numbers probably made it an easy answer. Trying to fight through a scandal can often cost a business more than it's worth to just pay the problem to go away. Not to mention that a scandal can have lasting effects well beyond a single day, week, or month.
However, simply paying to make a problem go away isn't enough, and whether Lululemon's tidbit of information will prove helpful or hurtful for the brand's reputation will be seen as, and if, details unfold surrounding the misconduct.
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