Tucked inside the pages of Lululemon's (LULU) website, the trendy, high-end purveyor of workout clothing declares: "Yoga has been proven to lower blood pressure and increases strength and flexibility. Yoga energizes our bodies and calms our minds."
All wonderful and aspirational qualities,but none of these attributes can be applied to the Vancouver-based company's stock, which is still trying to find a floor in the market after the sudden and unexpected resignation of CEO Christine Day announced late Monday.
Since that bomb was dropped, shares of LULU have shed over 20%, or $1 billion of its market value, and suffered multiple downgrades from analysts who are worried about the future.
"From my perspective, while the product is extremely important, Lulu is much more than that. It's that whole overall experience,'' says Sam Poser, a footwear and apparel analyst at Sterne Agee, in the attached video.
Related: The Bullish Case for Lululemon
In wake of the announcement, Poser cut his rating on Lululemom to hold from buy and lowered his price target to $75 from $90, saying that in Christine Day, "you have a visionary who really did a lot for the culture of the company."
He also points out that there are three other senior executive positions currently open, a situation he says won't impact them much in the near-term, but still leaves a lot of questions.
As he see it, investors are going to have to be ''very comfortable" with the next CEO in order to post 35 t0 40-times earnings," and he thinks it will take someone with a mix of skills and the understanding that "the value is created through both the product and customer engagement." Poser suggests that Lulu has more in common with Nordstrom (JWN) than Dick's Sporting Goods (DKS).
"You have to have somebody who really understands that about the business," he says, "the way they deal with yoga classes, brand ambassadors, and the store opening process are all part of the culture and essential to that success."
This is perhaps why the street has been slow to warm back up to this previously hot growth company.