Lululemon slides as founder launches proxy fight, misses 2026 targets
Chip Wilson nominates three independent directors amid seven quarters of North America sales decline
Lululemon Athletica shares fell in premarket trading Wednesday after founder Chip Wilson escalated a proxy contest to overhaul the company's board, while the athletic apparel maker issued guidance that fell short of Wall Street expectations.
Wilson, who founded the company in 1998 and remains one of its largest shareholders, nominated three independent director candidates for election at the upcoming annual meeting: Marc Maurer, former Co-CEO of On Holding AG; Laura Gentile, former Chief Marketing Officer of ESPN; and Eric Hirshberg, former CEO of Activision.
The founder's criticism centers on what he describes as the board's failure to address persistent operational challenges, including seven consecutive quarters of negative or flat same-store sales in North America. Wilson labeled recent product launches such as "Get Low" and "Breezethrough" as "stale and predictable," placing responsibility for product failures squarely on the current board's lack of brand and creative expertise.
The governance battle unfolds as Lululemon searches for a permanent CEO following Calvin McDonald's departure in January 2026. Wilson contends that a new chief executive should be selected only after significant board changes, arguing the current governance structure is insufficient to recruit or support visionary leadership.
The company's fiscal 2026 guidance disappointed investors, with management projecting diluted earnings per share of $12.10 to $12.30, below the $12.58 consensus estimate. Revenue guidance of $11.35 billion to $11.50 billion trailed analyst expectations of $11.52 billion.
First-quarter projections proved even weaker. Lululemon forecast earnings per share of $1.63 to $1.68, well short of the $2.09 Street estimate, while revenue expectations of $2.40 billion to $2.43 billion fell short of the roughly $2.47 billion analysts anticipated. The revenue outlook represents just 1% to 3% year-over-year growth.
The board has recently made one concession, with lead director David Mussafer announcing he will not stand for re-election. However, Wilson characterized the appointment of former Levi Strauss CEO Chip Bergh to the board as "underwhelming," stating that other qualified candidates had declined positions due to ongoing governance concerns.
Dana Telsey of Telsey Advisory Group lowered her price target on the stock, noting that interim co-CEOs' efforts to refine strategy may not gain traction until spring. She also cited tariffs as a significant headwind, estimating a $220 million impact for the year.
Janine Stichter at BTIG maintained a "Buy" rating but reduced her price target, observing that the 2026 guidance "trails consensus but still does not signal a full-scale reset." The assessment suggests investors remain divided on whether Lululemon requires more substantial operational changes or merely time to execute its current turnaround strategy.
Lululemon's market capitalization stands at approximately $18.7 billion, with shares trading around $164. The stock has fallen sharply from its 52-week high of $348.50, reflecting investor concerns about slowing growth in the company's core North American market and the strategic direction during its leadership transition.
Wilson has launched a campaign website, CreativityFirstlulu.com, to build shareholder support for his director nominees and proposed governance overhaul, which includes board declassification. The company has stated it engaged with Wilson in good faith but disagrees with his characterization of those discussions.
The proxy fight represents a critical juncture for Lululemon, which built its reputation on premium athletic wear and strong brand loyalty but now faces intensifying competition in the activewear market. Wilson's intervention comes as traditional retailers struggle with consumer spending patterns and inventory management in an uncertain economic environment.