Day's decision comes almost two months after Lululemon was involved in a scandal regarding the recall of a large batch of black pants over a "coverage problem."
The see-through bottoms were immediately replaced from shelves in a move that reportedly cost the company around $20 million.
“Plans have been laid for the next five years and a vision set for the next ten. Now is the right time to bring in a CEO who will drive the next phase of Lululemon’s development and growth," Day said in a statement. "I will continue to actively lead the organization while the board searches for a new CEO, and will work to ensure a smooth transition.”
During Monday's First Quarter Fiscal 2013 results call, the company announced it had a gross profit increase of 9 percent and a 10 percent decrease in income from operations.