A boardroom battle is brewing for control of Canada’s biggest apparel brand.
Driving the news: Lululemon Athletica wrote a letter to investors yesterday urging them to vote against the board nominees of its founder, Chip Wilson. The company criticized Wilson, saying he had an “outdated perspective” and that his board nominations were merely an attempt to regain control of the retailer.
Catch-up: Wilson stepped down as chairman of Lululemon in 2013, shortly after he made offensive comments about how some women's bodies aren't made for Lulu products. While he hasn’t been on the board in over a decade, he remains the company’s largest individual shareholder and has been a vocal critic of its leadership in recent years.
Wilson says the retailer’s struggles stem from its shift from a premium brand to a more generic athletic retailer, and has now put up three of his own board nominees to help carry out his turnaround vision.
Why it matters: Proxy fights like these only happen when a company is in trouble, and whoever comes out on top of this boardroom battle will have their hands full. Lulu’s stock is down over 43% this year, fashion trends are shifting away from its core products, and upstarts like Vuori and Alo Yoga (not to mention cheap private-label dupes) are poaching customers quickly.
Zoom out: Historically, when a company’s stock price and sales are plummeting, investors can be persuaded to return the reins to its founders. A few notable examples include Michael Dell’s return to Dell in 2007, Under Armour’s Kevin Plank just two years ago, and of course, Steve Jobs (that one turned out okay).—LA
