Lululemon is on the hunt for a new CEO.
The yoga clothing company that made headlines earlier this year for its see-through pants snafu said Monday that CEO Christine Day will step down as head of the company after a successor is named. Day has held the CEO spot for more than five years.
Lululemon Athletica Inc. shares dropped nearly 14 percent in after-hours trading following the news.
The time is right to bring in a new CEO to drive the next phase of Lululemon's growth, Day said in a statement, given that the company has laid plans for the next five years and crafted a vision for the next 10. Day will continue to lead the company while the board searches for a new CEO.
The Canadian company made the announcement as it reported a slight increase in its fiscal first-quarter profit on higher revenue.
Lululemon earned $47.3 million, or 32 cents per share, for the quarter that ended May 5. That's compared with $46.6 million, or 32 cents per share, in the first quarter last year.
Revenue increased 21 percent to $345.8 million from 285.7 million.
That beat market expectations for the quarter. Analysts, on average, were anticipating earnings of 30 cents per share on revenue of $341.4 million, according to FactSet.
Its revenue from stores open at least a year increased 7 percent. This is considered a key indicator of financial performance for retailers, because it strips away the impact of recently opened or closed locations.
Lululemon said the past quarter has been one of the most important in its history, as it coped with the fallout from pulling a line of its black yoga pants in March for being too sheer. The company blamed the see-through nature on a style change and production problems. It hired a new team to oversee the making of the pants.
The company previously said it anticipated losing $57 million to $67 million because of the pants issue. Day said it was able to get the product back into stores within 90 days of having pulled it, all while keeping customers happy with the brand.
Lululemon's performance does not seem to be hampered by the issue. The company forecast fiscal second-quarter earnings between 33 and 35 cents per share on revenue between $340 million and $345 million. Analysts, on average, were forecasting earnings of 33 cents per share, on revenue of $329.6 million.
For the full fiscal year, the company said it expects to earn between $1.96 and $2.01 per share, on revenue between $1.65 billion to $1.66 billion. Analysts were predicting earnings of $2 per share for the year on revenue of $1.65 billion.
Lululemon also said that it plans to delist its stock from the Toronto Stock Exchange on June 24, saying that the minimal trading volume there didn't make it worth the cost of maintaining both that listing and its stock on the NASDAQ exchange. Its shares will continue to trade on the NASDAQ.
Shares of Lululemon fell $11.38 to $70.80 in after-hours trading as the management change overshadowed the otherwise strong quarter and forecasts. The stock closed the regular session at $82.28, up about 8 percent since the start of the year.