Activist investor Elliott Management has amassed a stake of greater than $1 billion in Lululemon Athletica and is lining up a possible CEO candidate because it pushes to revive the struggling athletic attire retailer, a supply instructed Reuters on Wednesday.
Elliott has been working intently for months with veteran retail govt Jane Nielsen, former chief monetary officer and chief operations officer at Ralph Lauren, and views her as a possible CEO candidate, the supply added.
The hedge fund is now certainly one of Lululemon’s greatest buyers, with the transfer coming amid a busy yr for Elliott that already features a current funding in PepsiCo and an earlier proxy struggle at Phillips66.
The Wall Street Journal first reported the stake. Elliott and Lululemon didn’t instantly reply to Reuters’ requests for remark.
Last week, Lululemon stated CEO Calvin McDonald would step down in January after seven years in the function, with out naming a successor. Its share worth rose after information of McDonald’s impending departure however has dropped about 60 p.c from its peak two years in the past.
The firm, valued at $25 billion, now seemingly faces an costly and drawn-out board dispute over the place of CEO. Its founder and largest shareholder, Chip Wilson, has additionally known as for an pressing CEO search, led by new, impartial administrators with deep firm data to revive a product-first focus.
Wilson, who has beforehand courted criticism by saying some ladies’s physique shapes “just actually don’t work” with Lululemon yoga pants, has publicly blamed McDonald and the board for the corporate’s lagging share worth.
Known for its high-priced leggings and athleisure put on, Lululemon has ceded market share to newer manufacturers corresponding to Alo Yoga and to lower-cost private-label lookalikes, with executives voicing disappointment with product execution.
By Svea Herbst-Bayliss, Shivani Tanna
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Why Lululemon’s CEO Is Stepping Down. Slowing development, rising prices and a loud marketing campaign from its outspoken founder set the stage for Calvin McDonald’s exit. It would be the athleisure large’s finest hope to regain its cultural momentum.