①Lululemon is embroiled in a rare founder power struggle: amid the impending departure of its CEO and a sustained decline in its stock price, Chip Wilson, the company's founder who left years ago, is attempting to restructure the board; ②due to a stalemate in brand competitiveness, Lululemon’s stock price has been on a persistent downward trend over the past two years, with a drop exceeding 40% so far this year.
Cailian Press News on December 30 (Editor: Shi Zhengzhi) A well-known athletic apparel retailer, mired in management difficulties,$Lululemon Athletica (LULU.US)$ is facing a rare power struggle: company founder Chip Wilson has launched an offensive to oust the current board of directors.
Wilson issued a statement on Monday announcing that he had nominated three director candidates to run for positions on Lululemon’s board.
Just weeks ago, Lululemon announced that its CEO, Calvin McDonald, would step down in January next year, concluding a seven-year tenure. Over the past two years, due to Lululemon's inability to keep pace with competitors, the company’s stock price has continued to decline, with a drop of more than 40% this year alone. Currently, the company is also in the process of searching for its next CEO.
McDonald’s departure has also triggered this battle concerning the future of the company.
In his statement, Wilson noted that for Lululemon to achieve sustained growth, visionary and creative leadership is urgently needed—qualities he believes the current board members lack. He emphasized that introducing new leadership is crucial to redefining Lululemon and ushering in the next chapter of the company’s success.
The candidates nominated by Wilson include Marc Maurer, former co-CEO of On, a Swiss high-end footwear and apparel company and one of Lululemon’s main competitors. The list also features Laura Gentile, former Chief Marketing Officer of ESPN, and Eric Hirshberg, former CEO of Activision.
As background, Wilson was inspired to found Lululemon after attending a yoga class in the late 1990s. In the following years, the approximately $100-priced leggings quickly gained a near-cult following among women.
Wilson stepped down as CEO in 2005 and sold a 48% stake to private equity firm Advent International. Subsequently, Lululemon went public in 2007, and Advent later divested its holdings. After making controversial remarks, Wilson resigned from his position as chairman in 2013 and completely left the board in 2015. In 2018, Wilson revealed that he had “lost control of the company” since its IPO.
According to the latest data, Wilson still holds approximately 9% of the company's shares, making him the second-largest shareholder, only behind the fund management company Vanguard.
The founder stated on Monday that although he understands the urgency of finding a new CEO as soon as possible, he believes shareholders will not trust any CEO chosen by the current board. Therefore, he hopes to restructure the board first.
Generally speaking, it is common for external capital to pressure listed companies into making changes, but it is rare for the founder of a listed company to act as an external 'barbarian at the gate.'
In the case of Lululemon, Wilson is not the only party 'knocking on the door.' It is reported that the well-known activist investor Elliott Fund has acquired more than $1 billion worth of the company’s shares and is pushing for Jane Nielsen, a former Ralph Lauren executive, to become the next CEO.
According to informed sources, Wilson has already spoken with Jane Nielsen about this matter.
For Lululemon's board, finding the right CEO is only the immediate challenge; developing a strategy to revitalize the entire brand is even more urgent.
Neil Saunders, Managing Director and retail analyst at GlobalData, explained that Lululemon has encountered setbacks due to intensified competition, softening demand in the athleisure market, and outdated designs in its clothing line.
Saunders stated: 'This is evident in the current product lineup: there is little overall differentiation. In areas where the company has attempted to pivot, it appears to be sliding towards 'cheapness' — a flood of hoodies and tops with prominent branding, which neither reflect the sophistication traditionally emphasized by Lululemon nor align with its consistently high-quality brand image.'
After leaving Lululemon, Wilson continued to profit significantly from his knowledge of the apparel retail sector.
In 2018, Wilson participated in the acquisition of Amer Sports led by Anta, with FountainVest Partners and Tencent as co-investors. The consortium acquired the parent company of brands such as Salomon, Wilson, and Arc'teryx for 4.6 billion euros (approximately RMB 36 billion at the time) and subsequently pushed for Amer Sports’ IPO on the US stock market in 2024. The company’s market capitalization currently exceeds $20 billion (equivalent to RMB 146.8 billion).
When asked why he would not personally return to Lululemon, Wilson stated, 'I understand that this effort to drive change cannot revolve around me. The focus must be on restoring Lululemon’s commitment to genuine creative leadership, thereby rebuilding a brand with long-term vitality and enduring strength.'
Editor/Stephen