Lululemon has a major new activist investor. Will it save the company's business?
Activist fund Elliott Investment Management has acquired a stake in Lululemon Athletica for more than $1 billion and has joined the search for a new CEO for the company
Investment company Elliott Management has formed a stake in Lululemon Athletica worth more than $1 billion and has joined the process of searching for a new CEO for the sports retailer. This was reported by The Wall Street Journal (WSJ) and Reuters, citing sources. Now the hedge fund, the WSJ points out, has become one of Lululemon's largest shareholders.
On the back of this news, Lululemon shares rose nearly 5% on the premarket.
Details
Lululemon has fallen on hard times in recent months, the WSJ notes. Last week, the company announced that its CEO Calvin McDonald will step down in January 2026, and shared that Lululemon's business is now under pressure to right a lot of wrongs.
According to the newspaper's sources familiar with the situation, Elliott Management is working closely with Jane Nielsen, an experienced executive who previously served as chief financial officer and chief operating officer of Ralph Lauren. It is her that the activist foundation is now considering as a potential candidate for the CEO position at Lululemon, the newspaper points out.
Context
Following the announcement of the departure of the current CEO from Lululemon, the company's shares rose, but overall the sports retailer's stock has fallen about 60% from its peak two years ago. Now the company with a market capitalization of about $25 billion is likely to face a protracted and costly boardroom standoff over the issue of a new CEO, Reuters writes. Lululemon founder and largest shareholder Chip Wilson has also called for an urgent search for a new chief executive with independent directors with a deep understanding of the business to bring the focus back to the product.
Known for its expensive leggings and apparel in the athleisure segment, Lululemon has been ceding market share in recent years to younger brands such as Alo Yoga, as well as cheaper retailer-branded counterparts.
The activist hedge fund, which has now become one of Lululemon's largest shareholders, had also previously invested in PepsiCo and was involved in the proxy fight surrounding Phillips 66.
This article was AI-translated and verified by a human editor
