Lululemon founder Chip Wilson, who remains a major shareholder in the company, took credit on Friday for CEO Calvin McDonald’s departure.JONATHAN HAYWARD/The Canadian Press
The founder of Lululemon Athletica Inc. LULU-Q is calling for an overhaul of the company’s board of directors, as the purveyor of athleisure searches for a new chief executive officer – accusing the leadership of “complacency” as the brand has lost its cachet.
Friday’s statement from Chip Wilson followed the news of CEO Calvin McDonald’s ouster on Thursday afternoon.
Mr. McDonald, who has led Lululemon since 2018, will step down at the end of January. While he presided over years of growth at the company, under his leadership Lululemon also experienced a significant slowdown in its U.S. business starting last year.
The company’s stock price – which had dropped by more than 50 per cent this year prior to the news – jumped by roughly 10 per cent in Friday-morning trading.
The founder, Mr. Wilson, took credit for Mr. McDonald’s departure in his statement on Friday, saying that he had been urging members of the company “publicly and privately” to spearhead a “revitalization and an infusion of new skills” to fix its lagging performance.
“After overseeing years of poor decisions erode the brand and destroy shareholder value, it is clear to me that only under my increasing pressure has the lululemon Board of Directors finally started to listen,” Mr. Wilson wrote in the statement, calling the board’s succession planning a “tremendous failure.”
Mr. Wilson has not been a member of the board since 2015 but remains a major shareholder.
“This latest failure in my opinion only amplifies the urgency the Company faces and the obvious need for the CEO search to be led by new, independent directors with real experience,” he wrote in the statement. “I believe that the Board should seek the advice of individuals with specific and unique expertise, and deep knowledge of the Company, to advise on the CEO selection process.”
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A representative for Lululemon did not immediately respond to a request for comment on Friday.
Lululemon was once a dominant player in the market for premium-priced yoga pants and other athletic clothing. An early mover in the booming athleisure space, the brand was instrumental in making it fashionable for women to wear its stretchy items outside the gym.
But executives including Mr. McDonald have acknowledged that Lululemon has failed to stay compelling to shoppers, keeping old styles around for too long, while competitors such as Alo Yoga and Vuori have stayed on top of newer trends.
“We have not inspired our high-value guests to purchase as we had in the past,” chief financial officer Meghan Frank said on a conference call with analysts on Thursday. Ms. Frank and chief commercial officer André Maestrini will serve as co-CEOs of Lululemon on an interim basis during the CEO search process.
Ms. Frank added that the company is working on reducing the time it takes to develop new styles and bring them to market – a process that currently takes 18 to 24 months – in an effort to stay on top of changing trends.
“We see opportunity for a fresh perspective to stabilize sales, but the turnaround will take time, especially with LULU’s long lead times,” Bank of America Securities analyst Lorraine Hutchinson wrote in a research note on Friday.
Mr. Wilson has been a controversial figure in the past, angering customers back in 2013 when he discussed problems with see-through yoga pants and said “some women’s bodies just don’t work” in the company’s clothes.
Last month, Mr. Wilson took out a full-page ad in The Wall Street Journal, lamenting the brand’s “loss of cool” and criticizing leadership for not being focused on product and design.
“In my view, the board has failed to properly hold management accountable to deliver product innovation and instead has led with complacency,” he wrote in Friday’s statement, adding that company leaders no longer understand their customers.
“I hope the Board continues this constructive dialogue with me to find refreshed, experienced directors ahead of completing a CEO search,” he wrote.