Since yesterday, the stocks are down more than 16 percent to $68.50. This is the biggest fall for LULU shares in more than four years.
The high-end yoga clothing retailer has hired an executive search committee to find its new CEO. In the meantime, Day will continue her role until her replacement is selected.
Day has been the head of Lululemon since 2008 after leaving an executive position at Starbucks. She steps down after a fiasco with unintentionally see-through yoga pants and a series of quality control issues in Lululemon products. Then-Chief Product Officer Sheree Waterson resigned after what critics called Pantsgate.
The pants in question led the retailer to recall 17 percent of its black Luon yoga pants for being too sheer for downward-facing dogs.
The pants made national news, as did the solution to determine whether customers were eligible for a refund: Lululemon store associates were instructed to ask customers to put the pants on and bend over to demonstrate their sheerness.
"The truth of the matter is the only way you can actually test for the issue is to put the pants on and bend over," Day said at the time.
Lululemon later released a statement that the "bend-over" test is not a standard policy for the company.
Despite a letter to customers and an effort to ensure customers were satisfied with the product, stock fell 8 percent in March after the sheer pants made the news and cost the company millions of dollars.
The fall is expected to be the sole cause of this plunge.
"Despite good Q1 results that beat our estimates (32c vs. our 30c), the surprising announcement of CEO Christine Day’s departure is the relevant development that will weigh on the stock in the near term," said Camilo Lyon of Canaccord Genuity.