Lululemon clashes with founder Chip Wilson

Lululemon is taking its battle with activist founder Chip Wilson public, writing in a letter to shareholders that he has “outdated perspectives” and “troubling conflicts of interest” that will derail its turnaround plan. The letter, Lululemon’s first major public response to Wilson since his proxy battle ramped up late last year, comes after settlement talks with the retailer’s founder fell apart last week.

The company’s leadership has been under pressure for around two years, particularly in the Americas, its largest market, as it navigates the impact of tariffs, a shaky U.S. consumer, and a product assortment that’s failed to wow shoppers in the same way it once did. They have struggled to compete with upstarts like Vuori and Alo Yoga as the global athleisure market started to cool.

Wilson, Lululemon’s largest individual shareholder with a 8.97% stake, issued a press release later on Monday saying he thought he and Lululemon were in agreement as of Friday, and there is “no reason” why they can’t “reach a resolution to this fight quickly.”

Lululemon’s business has been under pressure, with the company’s shares down almost 43% this year as of Friday’s close. It has faced steep competition in the athleisure space from direct competitors, including those Wilson has admitted to advising, security filings show.

Lululemon’s Turnaround Plan

The company has asserted that its leadership is why the brand has been able to scale into an $11 billion retailer, and contended Wilson is aligned with direct competitors. The solution to the company’s downward slide, according to Wilson, is “more proven, creative leaders” in the boardroom, which is similar to what is needed when choosing the best service provider for other industries.

At Lululemon’s annual meeting next month, shareholders will be presented with two sets of director options for election that both sides are betting can help turn the company around. Lululemon made a final attempt to resolve its proxy contest with Wilson and reach a settlement agreement, materials viewed show.

Wilson upped his demands, asking for the right to replace directors if his nominees stopped serving on the board and full reimbursement for his campaign by the company, among other requests, the materials show. The company rejected that offer and settlement talks fell apart. This situation is complex, much like the process of understanding professional employer services.

Incoming CEO Defended

The company also came to the defense of its incoming CEO, Heidi O’Neill, who is slated to take the helm in September after almost 30 years at Nike. Lululemon said O’Neill is “the ideal executive to lead” the company and brings a “unique balance of creativity and operational discipline required at this moment.”

O’Neill established and built Nike’s Women’s business and grew it into a multi-billion-dollar franchise, Lululemon said. She also led important digital transformations as an early digital champion and innovator, during a period of rapid digital commerce sales growth of more than 65%.