The chakras are right and wrong among the board members of athletic giant Lululemon. Together they declared open war against the controversial founder who built a near fitness empire out of a yoga studio in Vancouver: Chip Wilson.
But the most startling revelation from public statements and company filings that emerged this week is that Lululemon’s board came very close to reaching an amicable settlement with Wilson.
Wilson’s public criticism of the business dates back more than a decade, but his campaign has now found fertile ground after the group’s latest skepticism has sent shares down more than 40 percent this year to lows not seen since 2019.
Core sales in the US have reversed course – not helped by the latest ‘look’ controversy, with customers blasting the retailer on social media about its new yoga tights showing their underwear – or worse.
You might expect that from Kmart’s $7 Anko leggings, but not Lululemon’s $159 version.
It may explain why Lululemon directors considered backing Wilson — who is its largest shareholder but owns less than 10 percent of the business — and his bid to have three nominees on the board by October.
For his part, Wilson would agree to vote on the board’s plans and not discredit them for two years.
The Board greatly appreciates their peace.
And who wouldn’t when you have someone as loud and prominent as Wilson, who said earlier this year that the company needed a major disruption and suggested “the entire board could resign”.
Lululemon’s board, led by executive chairman Marti Morfitt, was willing to try and look away from all this, but said the peace agreement fell apart when Wilson made new demands, and the directors of the leisure clothing group lost faith that he would keep the peace under any agreement.
The sudden change of board required some explanation. And the directors had to make a general attack on Wilson that explained why he should have nothing to do with the company, full stop.
This included accusations that he was an unreliable negotiator who “reneged – again – on previously agreed terms” and engaged in “disruptive, brand-damaging tactics”.
There were also his old-fashioned views, his “misunderstanding of public company governance” and, more importantly, his conflict of interest from being involved with companies in direct competition with Lululemon, such as major climbing competitor Alo Yoga, which he has advised.
“No board of a competent public company could give a direct competitor the influence or knowledge over strategy and future product plans as Mr Wilson has claimed,” the directors said.
It’s a strange turn for the board, which was in talks to give him greater control of the company a week ago.
One criticism in particular should concern investors and customers alike, as it goes to the heart of what kind of business Lululemon needs to be.
Lululemon’s board featured one of the most controversial comments Wilson made about the business, which led to his dismissal as chairman in December 2013, and his departure from the board in 2015.
In response to Lululemon’s first ‘see through’ saga – in which the group’s high-quality, high-priced shoes were clearly visible in certain yoga situations – Wilson suggested the problem lay with a type of reluctant customer.
“Some women’s bodies don’t work” for Lululemon clothing, Wilson told Bloomberg at that time.
It was a huge blow to Lululemon as he later apologized to his employees, saying he was “saddened by the impact of my actions,” but apparently did not apologize to female customers.
American comedian Stephen Colbert grilled Wilson on his television show, calling the Lululemon founder “Alpha Dog of the Week,” and passionately suggesting that Lululemon’s fat-shaming customers were a marketing ploy to get them to buy more pants.
It is clearly not a position that Wilson has abandoned.
In 2024, he blasted Lululemon over its approach to “the whole variety and inclusion thing,” complaining that the company was trying to be everything to everyone, like casual clothing retailer The Gap.
“You have to be clear that you don’t want certain customers coming in,” he said.
The statement prompted a further apology from the company amid calls for a boycott.
Purity seems to prevail, but the interesting part will be how many investors decide to back Wilson and his board candidates, and not the three competitors backed by Lululemon’s directors, who include former Levi Strauss boss Chip Bergh.
With the stock trading more than 65 percent below its record high in 2024, they have every right to be concerned.
Wilson, for his part, is playing an unusual mediating role: “There’s no reason why we can’t reach a resolution to this war quickly,” he said after the board abandoned peace talks.
“The board has not given me the details of our current disagreement, but as of Friday last week, we seemed to be in full agreement on the basic terms.
“I have not given up and I am ready to be a builder.”
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Colin Kruger is the senior business reporter for the Sydney Morning Herald and The Age.Connect through email address.
