Tags: Lululemon | Founder | Chairman | Vote

Lululemon Founder Turns on Board, Votes Against New Chairman

Wednesday, 11 Jun 2014 01:17 PM

Lululemon Athletica Inc.'s founder and biggest shareholder, Chip Wilson, lashed out at the yogawear retailer's board on Wednesday, announcing he had voted not to re-elect the company's new chairman, Michael Casey, and one other director.

In a press release just hours ahead of the company's annual meeting, Wilson praised Lululemon's new management but said he believes the board is "heavily weighted towards short-term results at the expense of product, culture and brand and longer-term corporate goals."

Wilson, who remains on the board and owns a 27 percent stake in the company, said he had voted his shares against Casey and director RoAnn Costin.

Vancouver-based Lululemon has been struggling in the aftermath of an embarrassing recall of see-through yoga pants, first announced in March 2013. Once a market darling thanks to its rapid expansion, it is expected to report little or no growth in same-store sales when it releases financial results on Thursday.

Lululemon said in December that Wilson had decided to step down as chairman before the annual meeting, and that Casey would take his place.

A source familiar with boardroom discussions at Lululemon said differences at the board level have been simmering for months, but directors only became aware that Wilson was voting his shares against the two directors on Tuesday.

QUALITY CONTROL

Wilson said Lululemon had asked him last year to return from his home in Australia to help deal with quality problems, and that he had overseen Lululemon's recent management shakeup.

Chief Executive Laurent Potdevin was recruited late last year to revive the company's fortunes. His appointment, and Wilson's resignation as chairman, came as comments made by Wilson deepened the public relations debacle the company faced over fabric used in some of its yoga pants.

Asked in a November interview about problems with the fabric, Wilson said it was not holding up because some customers' thighs rubbed together, adding that "some women's bodies just actually don't work" for Lulu's clothing.

The comments sparked an uproar, in part because of the perception that Wilson was blaming quality issues on customers. He later released a video apology.

Casey, a former Starbucks Corp executive, and Costin, president of a Boston-based private equity company, have been members of Lululemon's board since 2007.

Lululemon's stock, which has fallen about 50 percent in the last 12 months, is one of the most heavily shorted among companies reporting earnings in North America this week.

RAPID GROWTH

Lululemon was founded in 1998 and went public in 2007. Best known for popularizing stretchy yoga pants, it has grown rapidly in recent years. It had 254 stores in North America and Australia as of early February, up from 137 stores in early 2011. It also has smaller showrooms testing markets in Europe and Asia.

Affluent, active women were the company's first target market, but it now sells men's clothing and running gear, and has been experimenting with casual streetwear as well as apparel for other sports.

The company's manifesto advises readers to "dance, sing, floss and travel," and also "visualize your eventual demise," because "it can have an amazing effect on how you live in the moment".

Early on, the buzz was that Lululemon pants would last forever, but it has suffered several quality issues in recent years, including the pants recall and problems with some bleeding dyes.

© 2017 Thomson/Reuters. All rights reserved.

   
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Lululemon Athletica Inc.'s founder and biggest shareholder, Chip Wilson, lashed out at the yogawear retailer's board on Wednesday, announcing he had voted not to re-elect the company's new chairman, Michael Casey, and one other director.
Lululemon, Founder, Chairman, Vote
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2014-17-11
Wednesday, 11 Jun 2014 01:17 PM
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