Shares of lululemon (LULU) are in focus ahead of the company’s quarterly earnings report this afternoon. This will be the athleisure company’s first earnings report since its chief executive officer resigned for “conduct issues.” EARNINGS EXPECTATIONS: In January, lululemon hit a 52-week high after raising its fourth quarter adjusted earnings per share outlook to $1.25-$1.27 from $1.19-$1.22 and its net revenue view to $905M-$915M from $870M-$885M. This raised view compares to analysts’ current consensus estimates of $1.27 and $911.42M, respectively. The company also raised its total comparable sales for Q4 to up high single digits vs. its previous expectation of a mid-single digit increase on a constant dollar basis. At the time, lululemon said it was assessing the impact that U.S. tax reform will have, but expected to recognize a “significant” income tax expense in Q4 related to the one-time deemed repatriation tax on accumulated foreign earnings. The company said it believes that the impact of the tax reform will be favorable to the company’s effective tax rate in fiscal 2018. At the ICR Conference 2018, management reiterated that it is looking to achieve revenue of $4B by 2020 and an operating margin over 20%, and that it is working on improving its digital business. At the time, Stifel analyst Jim Duffy said recent trends make those targets “appear more tangible” and that achieving them “is not without execution risk.” SunTrust analyst Pamela Quintiliano said the increased guidance reflected strength across the business during the holidays and marks “meaningful sequential improvement” in trends. Meanwhile, DA Davidson analyst Tom Forte speculated that Amazon (AMZN) could extend its acquisition strategy to a a retailer of women’s apparel with physical stores such as lululemon to advance its sales in that “challenging category.” DURING THE QUARTER: In February, Laurent Potdevin resigned as lululemon CEO and as a member of the board, with Executive Chairman Glenn Murphy calling the move “a difficult and considered decision.” In a statement, lululemon said it expects all employees to exemplify the highest levels of integrity and respect for one another, and Potdevin “fell short of these standards of conduct.” “Culture is at the core of lululemon, and it is the responsibility of leaders to set the right tone in our organization. Protecting the organization’s culture is one of the Board’s most important duties,” the company added. Lululemon promoted three members of its management team — Celeste Burgoyne, Stuart Haselden and Sun Choe — to oversee more day-to-day operations, marketing, e-commerce growth, product innovation and supply chain enhancements. According to Bloomberg, Potdevin’s resignation spanned “a range of incidents involving multiple individuals,” while CNBC said that a multi-year relationship with a female designer was one of the issues contributing to the resignation. A search for a new CEO is ongoing. WHAT’S NOTABLE: Potdevin took the helm of lululemon in 2014, as the company was facing operational challenges and competition from other retailers and Amazon. In 2015, lululemon founder Chip Wilson stepped down as chairman after a tenure that led to a series of unflattering headlines for the company. The move came about two years after Wilson was forced to step aside as chief innovation and branding officer of the company, and one month after he suggested in a Bloomberg TV interview that some women’s bodies “just don’t actually work” for his yoga pants. PRICE ACTION: Shares of lululemon are down 1% in morning trading to $79.53. Since December 7, 2017, the day after the company’s last earnings report, Lululemon shares are up about 18%.