There’s a growing crisis in retail C-suites. Nobody wants the top job. VF, Adidas, Calvin Klein, Puma, Designer Brands, Stitch Fix and Rite Aid have longstanding vacancies ready to fill.
Gap is close to announcing a permanent replacement for Sonia Syngal who left the company in the middle of last year, but it will have another CEO position to fill for the Athleta brand after Mary Beth Laughton makes her exit. And Gap’s chief people officer is on the way out as well.
To fill the open slots, board members are moving from their interim roles to take the jobs full-time, as Tom Kingsbury did at Kohl’s. But he is nearing 70 years old and may not have the stamina or runway that the company needs to carry it forward for the long-term, no matter how well-qualified he is.
A similar stop-gap measure was taken at Victoria’s Secret after Amy Hauk’s abrupt departure from its flagship Victoria’s Secret brand. VS&Co. CEO and board member Martin Waters added the job to his already demanding role. But there’s only so much one person can do, and he may be spread too thin given the continuing troubles confronting the brand and the challenge of transitioning newly acquired Adore Me.
Churn in the C-Suite
Blame the turnover in retail leaders on the pandemic and the subsequent economic fallout, but whatever its cause, the churn in retailers’ C-suites will get worse before it gets better. Korn Ferry reports the average tenure for CEOs among the 1,000 largest U.S. companies is 6.9 years, down from 8 years in 2017, with the longevity among all C-suite executives dropping from 5.3 years to 4.9 years.
Given the latest earnings reports from the nation’s largest retailers with most reporting sales declines in the last quarter if not the entire year, major retailers may be pressed to overhaul their C-suite if things don’t turn around fast. “Boards of challenged retailers are looking for a silver bullet CEO who has instant credibility with the Street,” observed Catherine Lepard, executive search firm Heidrick and Struggles’ managing partner of its global retail practice.
“Every company is competing for the rarified CEO with an excellent track record. But that pool is small, and there’s not much incentive for some of these CEOs to leave their high-performing companies to do something messy,” she continued.
Whether a cast-off CEO is ready to clean up someone else’s mess is the key question. Why wouldn’t a successful, competent, and confident CEO choose another path by packing up their talent and experience to start their own company? I suspect we will see more individuals doing just that, like former Lululemon CEO Christine Day. “I wanted to pursue my own passion and purpose and find new opportunities besides executing somebody else’s vision. I wanted to create something and do business the way I thought it should be done,” she shared with me.
Live and Learn
Day started her career working for a private equity firm where she met Howard Schultz when he was looking to grow Starbucks. She helped him raise funds but then left investing to join Schultz and Starbucks, working her way up to manage its Asia Pacific division.
The work was rewarding but the travel was brutal. “I was spending 230 nights per year on a plane,” she said, so after 20 years with Starbucks and having three children in the meantime, she called a halt. “I decided to take a year off. I got to a place where I needed to know where Christine started, and Starbucks ended.”
As her sabbatical came to a close, she was recruited by Lululemon’s founder Chip Wilson and former Reebok CEO Robert Meers, who joined the then-private company in 2005. Meers saw the company through its IPO in 2007 but found his management philosophy conflicted with Wilson’s and he left shortly thereafter.
Day joined Lululemon in January 2008 as COO seven months after the company went public and was appointed CEO in June of that year. During her tenure from 2008 through 2013, she more than quadrupled company revenues – from about $300 million to $1.4 billion – and boosted net income from $31 million to $270.5 million. And its store count grew from 81 stores in 2008 to 211 in 2013. In recognition of her accomplishments, Day became the first woman to be named “CEO of the Year” by The Globe and Mail.
According to his autobiography, The Story Of Lululemon, Wilson was thrilled to have a talented woman run a female-oriented company. But from Day’s perspective, that was one of her fundamental problems at Lululemon. Wilson’s “in-your-face, stick-it-to-the-man” disruptive management style was at odds with Day’s quieter, more contemplative, complimentary style. “I wanted to instill the essence of yoga into the company based on values and ideals,” she said. “Our biggest fights were over what he called my ‘feminine’ management style. I lead with strategy and a team, not a dictatorship.”
And she continued, “Here we were performing in the 95th percentile of any corporate metric that mattered with all of my team working so hard to produce these types of results, but I wasn’t able to lead the company with my values. Going into the board meetings was just an abuse session.”
It became a battle of wills. “Chip felt like the company was becoming mine not his and he didn’t like it.” She had the strength to stand up to Wilson and the board, but the situation became untenable once it started to filter down to her team. She tendered her resignation in the middle of 2013, and staying true to her team-building spirit, she stuck around until a replacement was found. “I basically became the sacrificial lamb to create the change that needed to occur,” she shared. Then she took another year off to plan next steps.
Moving On, Moving Ahead
She joined the Kohl’s board and dabbled a bit in the DTC food business until she found her next purpose in starting a new-age fashion company in partnership with Russell Wilson, the multi-talented football and baseball great and his wife singer-songwriter Ciara. It’s called the House of LR&C.
Building a company from the ground up has allowed her to imprint her values on its culture. And by partnering with co-founders keenly in tune with the sensibilities of its target customers, Day has the prescription for success in the House of LR&C.
The House of LR&C includes three distinctive brands: Russell’s Good Man, showcasing casual men’s fashion and footwear; Lita by Ciara, combining sophisticated looks with everyday casual for women; and gender-neutral Human Nation for athleisurewear. The company has also released a limited kids’ collection called 3Brand by Russel Wilson.
Imbued with the feel-good values of Love, Respect and Care, everything LR&C makes is created sustainably with a firm fix on the priorities of its youthful, diverse customers. “Retail is in one of the biggest transitions I’ve ever seen, and the consumer is changing more rapidly than I’ve ever experienced,” Day said as she pointed to the diversity of Gen Z consumers, who are 40 percent non-White. “They want brands that are relevant for them, and they want to participate in building brands and retail, whether as part of your salesforce, being your stylist or influencer.”
She describes it as the emerging Creator Economy. “They care deeply about ESG, worker rights, diversity, and globalization. We’ve got to reinvent retail for the consumers of today and tomorrow.” Regarding the next gen’s choice in fashion, Day observed they want quality that lasts and styles they can make their own. “They want bigger seams and hems so they can upcycle clothing. While they follow trends of the season, they want most to present their personal style that transcends the trends of the moment. So, you have to build retail business models that solve that paradox so the consumer can participate, upcycle and personalize their fashion.”
Currently, the digitally native House of LR&C is expanding into retail through company owned pop-up shops, including one at Roosevelt Field next door to J. Crew and Madewell, and wholesale with eight major retailers and about a hundred independents.
Going Her Own Way
While Day could polish up her resume and go for one the current CEO openings with the big bucks that come with it, money isn’t everything to her. Using her talents and experience to do her own thing gives her rewards aplenty right now and the money will surely follow given her track record.
“After having contributed to two such significant companies in an operating role, I wanted to spend more time on my creative side,” she shared. “Changing industries for the better with purpose and values is very important to me. That’s easier to do in small and midsized private companies with highly engaged teams.”
Besides the opportunity to express her right-brain creative side after exercising her rational left-brain in corporate roles, Day found more personal rewards in leading a startup. “I wanted freedom and personal flexibility to create platforms and business models for change. And then, I needed a break from the exhaustion of dealing with all the stakeholder tensions and what it takes to run a company at scale,” she said and added “What I am doing at House of LR&C meets those goals.”
The path Day has chosen – that of the corporateneur, one who leaves corporate America mid-career to become an entrepreneur – is one that other highly successful, experienced corporate CEOs are likely to follow, whether cast off from their positions or just burnt out after years of contending with the continued conflicts and day-to-day challenges.
It’s a path that will test her limits beyond taking another CEO position to do some board’s bidding. She understands, like all great leaders, the key to winning is to pick your battleground and she’s picked a new one. And great leaders also understand the better part of valor is to press forward when victory looks certain and to retreat when it’s not.
“The skill set to be a CEO has grown exponentially. You have to be super-resilient because we’re living in a world where your best is never enough. There are always fires that need to be put out,” she said. Day has determined it’s time to move out, move on and move up to a more sustainable lifestyle and personally rewarding position. I predict others will be doing the same. The price of corporate success often isn’t worth it.