Lululemon Founder Looking to Take Company Private

Chip Wilson spent years building lululemon athletica into a brand that grew large enough to be torn down -- now he wants to build it up again.

Jul 7, 2014 at 9:15AM

No one knows the ins and outs of the lululemon athletica (NASDAQ:LULU) brand or values better than founder and former CEO Chip Wilson. Yet Wilson has trampled over those same values a half-dozen times in a number of PR gaffs. It's a setup for a bad movie, in which only person who can save the failing community center is the exiled director who's fallen out with the public over his undesirable ways. Will he come back? Can he save the place? Will Debbie dance with Nathan at the big fundraiser?

Source: lululemon athletica.

The Wall Street Journal reported that Wilson has been nosing around at some private equity firms, looking for a hand in taking his old company back. Wilson still holds a 28% stake in the business, making him the largest individual shareholder. The company has long known that if Wilson decided to do something -- buy the business, sell all his shares, advocate for a change on the board, etc. -- that it would face a difficult fight. Now it looks like the fight is finally coming.

Wilson's ups and downs with Lululemon
"[Quite] frankly some women's bodies just actually don't work for [Lululemon yoga pants]." That's Wilson in his most recent misstep, telling Bloomberg last fall that some customers were having issues with their yoga pants because they had the wrong body. It's not a way to win friends, and I don't recommend it in any social setting.

Wilson is full of these sorts of tidbits, the kind that seem to come out through a faulty internal filter. The "faulty bodies" quote was the last straw for Lululemon's board. Wilson stepped down as chairman not long after the interview, adding to the series of bad news coming from the company.

Lululemon's fall
Wilson wasn't the reason Lululemon was down on its luck in the first place. The company took a hard hit when it was discovered that its product quality assurance system had fallen apart. Lululemon was selling overly sheer yoga pants; there were recalls and refunds, and the media had an absolute field day with the news. Competitors took the opportunity to step up with their own fashionable yogawear as Lululemon spiraled further downward.

The core of the problem wasn't even the product, it was the way the company interacted with the community in this case. Lululemon has long been a community-based business, and it's clear that Wilson understands that. Lululemon opened its first store in 2000 and in 2007 went public for $327 million. Wilson grew the business largely on the back of a community of yoga practitioners, one location at a time.

When the company hit its quality issues last year, it responded by effectively saying it was not at fault and that the "fabric involved ... met testing standards." At the time, Lululemon was sitting on a comparable-store sales increase of 11% for the quarter -- last quarter, retail comparable sales fell 4%.

Wilson's potential return
Even though Wilson "gets" the business in a way that others may not, that's not reason enough for him to come back. Current CEO Laurent Potdevin has a background with another strong community-driven business, TOMS Shoes. A move by Wilson at this point seems too early in Potdevin's tenure for the new CEO to have had sufficient time to make a change on his own. On the other hand, Wilson may not care about giving Potdevin a fair shot. He may simply be tired of not running the business the way he wants it run.

For investors, this could be the beginning of a long process that ends in frustration or a small payout. Lululemon's stock is down 34% over the last 12 months, and even a premium for the business seems unlikely to recoup that loss. Lululemon has a long way to go to get back to where it was, and even with his vision, Wilson seems unlikely to be the company's best option.

Leaked: This coming consumer device can change everything
Imagine the multibillion-dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the-radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  

Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends lululemon athletica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers