Jerry Stritzke spent the past five years helping build REI’s brand as one of the most ethical players in the outdoor retail business. But this week, REI’s CEO acknowledged that he himself had gotten on the wrong side of the rules.
On Tuesday, employees of the pioneering Northwest retailer were told that Stritzke had resigned after an investigation into a “personal and consensual relationship” between the CEO and the head of “another organization in the outdoor industry,” according to a statement from the company. It wasn’t clear whether the organization was an REI supplier or other partner.
News of Stritzke’s departure was announced by REI board Chair Steve Hooper at an employee meeting at the company’s headquarters in Kent. Stritzke, who joined REI in 2013, will leave the company March 15, according to a company statement issued Tuesday morning. Eric Artz, REI’s chief operating officer, will become interim CEO immediately.
Although the investigation found no financial misconduct, according to the statement, Stritzke’s failure to disclose the relationship “led to a perceived conflict of interest” for the retailer, which has long cultivated an image of transparency. Indeed, in keeping with that image, the company’s statements on the matter were surprisingly detailed.
“We will always be grateful for Jerry’s drive, his many contributions to the co-op and the successes he and his team have made possible,” Hooper said in a statement. “The conclusions of the investigation, however, were clear. Errors of judgment were made and Jerry and the board agree that REI needs a new leader to take the co-op forward from its very strong position.”
Likewise, in an open letter to employees, Stritzke offered a forthright apology. “I regret few things in life but I am sorry that I did not disclose the relationship, and it’s time for the co-op to have a new leader.”
Although REI declined to comment further on Stritzke’s resignation — “We’re not sharing any more detail at this time,” spokeswoman Halley Knigge said Tuesday — the company was busy reassuring suppliers and other partners that the change in leadership would not affect business. “None of this impacts our partnership,” said an email sent to several vendors, according to a report in trade publication SNEWS.
The resignation of Stritzke, who made $2.8 million in 2017, comes at a challenging moment for REI, or Recreational Equipment Inc., which was founded in 1938 in a corner of a Seattle cooperative grocery.
REI has two locations in Alaska, one in Anchorage and one in Fairbanks.
Although the company reported record sales of $2.62 billion in 2017, the outdoor retail industry that REI helped pioneer faces significant challenges, from online retailers to the growing popularity of rental and secondhand products marketed to a younger, cost-conscious consumer.
“This generation is very strapped for cash,” Matt Powell, an outdoor-industry adviser, told SNEWS in January. As Stritzke himself noted in 2017, the biggest challenge the company faces is that “the basis of retail is fundamentally changing.”
Stritzke’s resignation also cuts short what has been a successful effort to leverage REI’s brand as a company that is as committed to its employees, customers and communities as it is to its own bottom line.
In 2018, Stritzke guided the roll out of tough, new sustainability standards for suppliers that covered everything from the chemicals in sunscreen to the treatment of the animals providing feathers and wool — a policy Stritzke called “maybe one of the most transformative” in the company’s history.
Stritzke also continued REI’s penchant for political advocacy that had flourished under his predecessor, Sally Jewell, who left the company to become President Barack Obama’s secretary of the Interior. In 2017, the company protested the Trump administration’s immigration policy. It also joined a successful industry effort to move a major outdoor-industry trade show from Salt Lake City to Denver in protest over Trump’s policies on national monuments.
Perhaps most notably, in 2016, REI became one of the first major retailers to close on Black Friday — and give its employees a paid day off — as part of a campaign to get people outside. “We recognized the opportunity we had as a co-op to lead with our values, and do the right thing for our 12,000 employees,” Stritzke told The Associated Press at the time. “We got to send an important message that we’d rather invite people to go outside with us rather than be fighting it out in the aisles.”
Yet in some ways, Stritzke was an unusual fit for the job. Before coming to REI, he worked at accessory retailer Coach as well as Limited Brands, parent company of such indoor outfitters as Victoria’s Secret and Bath & Body Works.
There also have been concerns among some longtime customers that REI, which still operates as a member-supported cooperative, is becoming too much like a conventional retailer, with an emphasis on high-end products and high-pressure sales. “As long as I can still go to REI and be asked at least twice per visit by enthusiastic, green-vested staff if I would like to become a member, then nothing has changed,” quipped one Seattle Times reader after news of Stritzke’s resignation broke.
Still, until Stritzke’s relationship came to light, he seemed to be on good terms with board members. At the company’s membership meeting in May 2018, Hooper, the board chair, said that Stritzke had just passed his annual evaluation and “came through in flying colors.”
Indeed, that rapport may help explain the regretful tone in Stritzke’s final letter to employees. “REI expects high standards from its leaders. The board and I agree that, in this instance, my decisions did not meet them and the last thing I want is to damage REI. I deeply regret that my actions could impact the co-op. You deserve better.”
Seattle Times business reporter Ben Romano contributed to this story.