Lululemon’s (-43% YTD) Identity Crisis Boils Over as Founder Lights the Fuse on a Boardroom Showdown

“It’s a bold strategy, Cotton. Let’s see if it pays off for ‘em.”

Because when your stock is down 43% in a year while the broader market can’t stop, won’t stop going up, you know what they say… desperate times call for desperate measures.

That’s where Lululemon finds itself right now… and apparently where its founder Chip Wilson decided enough was enough.

Early this morning Wilson announced he’s launching a full-blown proxy fight to shake up Lululemon’s board, nominating three new directors in what amounts to a corporate version of “I’m not mad, I’m just deeply disappointed.” And no… he’s not trying to put himself back in the big chair, which somehow makes this even more ominous. This is less “founder comeback tour” and more “dad coming downstairs after hearing the party got out of hand.”

The nominees aren’t exactly randoms pulled off LinkedIn. Wilson tapped former On Running co-CEO Marc Maurer, former ESPN CMO Laura Gentile, and former Activision CEO Eric Hirshberg… a lineup that screams brand, culture, execution, and maybe a little “press X to respawn innovation.”

(Source: Wall Street Journal)

Remember, this all lands as Lululemon drifts through a full-on identity crisis. Earlier this month, the company announced CEO Calvin McDonald will step down in January, following mounting pressure to revive growth and, more importantly, give shareholders hope. Sales in the U.S. have stalled, newer rivals like Alo Yoga and Vuori are eating market share, and Wilson has been publicly accusing the brand of “losing its cool”... which, in athleisure terms, is basically the kiss of death.

The founder’s logic makes a lot of sense the more you think about it: shareholders won’t trust a new CEO picked by the same board that presided over this mess. Translation: change the cooks before blaming the recipe.

Wilson still owns nearly 9% of the company, making him Lululemon’s second-largest shareholder behind Vanguard Group, and he’s not the only activist circling. Elliott Investment Management has built a stake north of $1 billion and is pushing for former Ralph Lauren exec Jane Nielsen to take over as CEO. Wilson has already spoken with her, which tells you this isn’t theoretical. What do they say? Chess, not checkers.

What makes this fight especially compelling is how rare it is. Activist investors using former executives as battering rams? Normal. A founder going hostile on his own company? That’s personal. Wilson stepped aside as CEO in 2005, left the board entirely by 2015 after saying he couldn’t speak freely, and has watched four CEOs rotate through since. From his perspective, he’s not meddling… he’s here to save the company he built.

And it’s not as if Wilson forgot how to build brands. In 2019, he helped buy Amer Sports, parent company of Salomon and Arc’teryx, which went public last year and is up over 35% with a market cap north of $21 billion. Hard to ignore that track record when Lululemon is busy bleeding relevance.

Needless to say, those sweet pandemic years (when Lululemon could slap a logo on leggings and watch cash rain from the sky) are firmly in the rearview. And based on his recent actions, Wilson has decided patience isn’t an option. Which means we now get a front-row seat to see if blowing up the board is the fix Lululemon is searching for.

Bold strategy, indeed.

At the time of publishing this article, Stocks.News holds positions in Disney and Vanguard Total Stock Market Index Fund ETF Shares

(VTI) as mentioned in the article.