Chip Wilson is mounting an Activist play at lululemon

Let me be 100% clear: Chip Wilson seems like an uber-douche.

But he did create an amazing brand around sweat and an active lifestyle. Until he was ousted from the company he started back in 2015.

In a new WSJ Article, we are getting some indication that Chip may be trying to lead an activist play at lululemon, where he remains a major shareholder (he holds around 8% of the shares outstanding)

He has blamed the “loss of cool” on the kind of CEO who can “speak Wall Street” but is killing innovation.

Basically they're suffering from "post-founder syndrome"... they have an identity crisis. He paid for this full-page ad in the WSJ:

In the ad bashing Lululemon, Wilson wrote that “finance focused CEOs don’t know how to attract or motivate creative talent, and even worse, they think they understand great product when they don’t.” What Lululemon is missing, he suggested, is someone like himself: “A company bereft of a visionary loses its singular voice for product and long-term strategy.”

CEO Calvin McDonald agrees with some portion of Chip Wilson's complaints. “Parts of our product [offering] have become predictable, and we need to focus on innovation and creativity at an accelerated rate,” McDonald said. 

We have some other problems too...

At one point this month, more than 1,200 items were discounted on Lululemon’s app, according to Jefferies analyst Randal Konik. Three to four years ago, 90% of its products sold at full price, he said.

Quality issues have also cropped up. Lululemon’s Breezethrough leggings were so poorly received by customers, who said the fabric was too thin and the V-shaped seam lines were asymmetrical and unflattering, that it stopped selling them weeks after their July 2024 introduction.

Lululemon says that markdowns are similar to those in 2023 and 2024 and that only 1 out of 200 items are returned for quality issues.

Last year, McDonald reorganized his leadership team as part of a push to cut the two-year product-development cycle roughly in half. He has also vowed to boost new styles to 35% of the assortment by the spring, up from 23% currently.

That’s when the real test will come—when the first products designed by new creative director Jonathan Cheung hit shelves. 

Sentiment: neutral