Activist investor Elliott Management amassed a $1 billion stake in Lululemon Athletica as the battle for a new CEO of the yoga retailer heats up, according to a report.
A week after Lululemon’s chief executive Calvin McDonald announced that he’s stepping down in January, at least two major investors in the Vancouver-based company are angling to install new leadership at the struggling athleisure company.
New York City-based Elliott Management is working closely with former Ralph Lauren executive Jane Nielsen, who the hedge fund sees as a leading candidate to reverse Lululemon’s decline, sources told The Post.
The hedge fund has been working with Nielsen for months and its investment was not tied to McDonald’s resignation announcement last week, according to a source with knowledge of the situation.
Meanwhile, Lululemon’s founder and former CEO and one of its largest shareholders, Chip Wilson, said last week that he wants new, independent directors to lead the CEO search.
“The board has failed to properly hold management accountable to deliver product innovation and instead has led with complacency,” Wilson said in a statement last week.
Lululemon’s sharess rose by more than 10% after McDonald announced his resignation.
On Thursday they were up 8% on news of the Elliott stake.
Nielsen was Ralph Lauren’s chief financial officer from 2016 to 2019 when she became the chief operating officer and stepped down earlier this year.
Elliott Management did not immediately comment on its stake in Lululemon.
“Lululemon is one of the most powerful brands in retail, defined by exceptional products, deeply engaged communities and significant global potential,” Nielsen said in a statement to The Wall Street Journal. “I would welcome the chance to discuss this opportunity with the Lululemon board.”
Lululemon’s fortunes have tumbled this year as newer competitors grab marketshare and management made a series of missteps, including introducing brightly colored fashions that have not sold well and landed on clearance racks.
Wilson has said the company lost its “cool” factor. Known for rarely discounting, the company has had to move more merchandise than ever before to clearance racks.
After seven years at the helm, McDonald will remain with the company as an advisor until March.
The company’s chief financial officer, Meghan Frank, who will serve as interim co-CEO, said on an earnings call last week, “We’ve let product lifecycles run too long within some of our key franchises and we have not inspired our high-value guests to purchase as we had in the past.”
Lululemon’s total sales in the most recent quarter ended Nov. 2 rose by 7% to $2.6 billion – fueled by growth in China and elsewhere abroad – but its sales in North America were down 2%.
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