Recreational Equipment Inc., the outdoor-gear retailer better known as REI, is getting a new trail guide.
The struggling company announced on Wednesday that longtime CEO Eric Artz is retiring in late March and will be replaced by Mary Beth Laughton, a well-regarded retail veteran whose most recent roles have including heading Nike's stores and websites, as well as being CEO of Gap Inc.'s Athleta brand. Laughton will start as president on Feb. 3, and after a transition period, will take the full reins on March 25.
The news comes two weeks after REI announced yet another round of layoffs along with the end of its money-losing "Experiences" guided-excursions business. While REI will report its full-year financial results in late April, Artz said in early January that the retailer will come close to break-even operating income for 2024, excluding the dividend it pays members.
That would represent an improvement over its recent performance, but it does signal that REI, a co-op beloved for its planet-friendly earnestness, store workers always eager to talk camping gear, and advocacy of the outdoors, is not yet out of the woods.
In 2023, REI bled money, losing $311 million, its second year of losses in a row while sales slipped 2.4% to $3.76 billion, hurt by a shrinking outdoor-gear market and REI’s own missteps. But perhaps more worryingly, there has been a growing sense for years of a company gone adrift, as evidenced by tense relations with many store workers, known as Green Vests for their easily identifiable clothing, amid an effort at some stores to unionize. Between 2022 and 2024, staff at 10 of REI’s 187 stores unionized, unhappy over matters such as raises, work schedules, and career paths.
While REI's chairman Chris Carr praised Artz in a letter to employees and members "for navigating some of the most challenging times in retail and our industry," many employees have felt differently about his tenure.
As detailed in a Fortune feature last summer, employees have chafed not only at working conditions but also at what they see as changes in REI’s culture. Artz implemented more centralized decision-making, conducted a costly overhaul of its e-commerce business, and replaced a number of its leaders with executives from large national retailers. That left many Green Vests and industry observers to wonder whether REI was losing its soul by aping big-box rivals like Cabela’s, Dick’s Sporting Goods, or evenWalmart. Under Artz, REI also struggled with its supply chain during and after the surge in business caused by the COVID pandemic, leading to inventory chaos, as well as lost sales and profits.
In Laughton, REI is getting a CEO experienced at running stores and websites—she has spent the last 18 months as head of Nike's enormous global direct-to-consumer business, as well as heading up a business focused on social values. Athleta, which she led from October 2019 to April 2023 is a Certified B corporation, and under Laughton's watch, the athleisure chain signed endorsement deals with athletes such as gymnast Simone Biles and sprinting champion Allyson Felix, who championed issues like mental health and female empowerment. And as a former REI director, she is already quite familiar with the company.
Still, while Laughton helped Athleta grow quickly initially, she left Gap Inc. almost two years ago amid a sales slide and what Gap Inc.'s interim CEO at the time, Bob Martin, called "product acceptance challenges over the past several quarters." To be sure, it was a tumultuous period across Gap Inc., not just Athleta.
Laughton will have her hands full at REI. While the company has a lot of consumer goodwill to tap into, it has faced more aggressive competition from the likes of Cabela's and Dick's. But as a co-op, it has had a cost structure that makes it harder to compete with those rivals: REI has historically given back the equivalent of about 70% of profits each year in the form of dividends, employee bonuses, and investments in the outdoor industry, leaving it with much less room to maneuver.
"No other company balances purpose and performance quite like REI and we must ensure it thrives for generations to come," Laughton wrote in a statement.
