'Turning point': Lululemon settles dispute with founder. What about the stock?

Shares of sportswear brand Lululemon rose in trading on May 27 after the company reached an agreement with founder Chip Wilson to end a long-running dispute. To end it, Lululemon decided to change the composition of its board of directors.

The conflict between the current management of Lululemon and Wilson lasted for several months: the founder of the company, among other things, was dissatisfied with the results of Lululemon and at the end of last year started a "proxy fight" against the top management of the sportswear manufacturer in order to change the composition of the board of directors. Lululemon eventually agreed to the change: under the terms of the agreement, three new people will join the sports brand owner's board of directors. Two of the candidates are from company founder Chip Wilson: Mark Mauer, former co-head of sneaker maker On Holding, and Laura Gentile, former ESPN marketing director. Both will join the board after Lululemon's annual shareholder meeting on June 25. The third new Lululemon board member - with product and brand expertise - will be selected jointly by the company's management team and Wilson. The parties will announce his or her candidacy by October 1.

Wilson, who owns an 8.7 percent stake in Lululemon, in turn agreed as a compromise to a clause in the agreement that would "limit his stake" in the company, Reuters specifies, and also - pledged to stop publicly criticizing Lululemon for about 18 months.

"The new board members and strategic changes already made by the team reflect meaningful progress toward restoring product prioritization and unlocking shareholder value," founder Chip Wilson said in a statement cited by Bloomberg.

"We are pleased to have reached an agreement with Chip Wilson that allows Lululemon to focus on further strengthening its position," said Lululemon Chairman Marty Morfitt. In a memo to employees after the agreement was reached, she noted that it was a "pivotal" period for the company, and the current deal "will provide Lululemon with peace for approximately 18 months" and allow the company to fully focus on executing its strategies (the letter was obtained by Bloomberg).

Wilson's relationship with the management of the company he founded became increasingly strained as Lululemon's financial performance deteriorated and its stock price plummeted, Bloomberg notes. The conflict escalated at the end of 2025, when the founder of the sports brand proposed his own candidates to the board of directors of the company and began to publicly criticize the management of Lululemon. In particular, he accused Lululemon's top management of "stifling product innovation" and "losing its cool." Lululemon, in turn, called the 71-year-old founder's views "outdated".

After founding the company in 1997, Wilson remained head of Lululemon until 2005. After that - until 2012 - he was the company's Director of Branding and Innovation and a member of Lululemon's Board of Directors. He left the board in 2015.

In addition, the company has been under additional pressure recently from increased competition in the sportswear market, as well as the Lululemon leggings scandal from the Get Low collection. Earlier this year, the company suspended online sales of these products in North America after customer complaints about the leggings' material being too transparent. The retailer had previously withdrawn its Breezethrough range of leggings from sale due to quality complaints - adding to investor concerns about standards control and the brand's competitiveness.

Amid more than a year of weak results for Lululemon and management's conflict with Wilson, Lululemon announced a CEO change in April: ex-Nike top executive Heidi O'Neill will take over as CEO in September.

For now, however, Lululemon's expectations are not in line with analysts' forecasts: in its most recent report, which was released in March, the sportswear maker said it expects full-year 2026 revenue in the range of $11.35-11.5 billion against analysts' consensus forecast of $11.52 billion, and earnings at $12.10-12.3 per share versus expectations of $12.58.

Shares of the sportswear brand were up 7% in early trading on Ma. 27. During the day the growth slowed down to 3.5%. Since the beginning of the year, Lululemon securities have lost about 39%, and over the past 12 months - 58%. From the historical maximum, set in December 2023, quotes have fallen by about 75%. The retailer's papers are heading for a third consecutive annual decline, notes Bloomberg.

Wall Street analysts are cautious about the company's prospects: 28 out of 33 experts, who watch Lululemon securities, recommend to keep them in the portfolio, four more advise to buy and one - to sell. The growth potential of Lululemon shares relative to the average analysts' target price of $171 per piece is 34% by the closing of the securities on Ma 26.

This article was AI-translated and verified by a human editor