Activist investor Elliott Investment Management has reportedly acquired an over $1 billion stake in Lululemon Athletica (NASDAQ:LULU) and is proposing a new CEO to help the athletic apparel retailer recover from its recent struggles.
Lululemon Faces Leadership Shakeup
Elliott is collaborating with seasoned retail executive Jane Nielsen, a former CFO and COO at Ralph Lauren (NYSE:RL), who is being considered as a potential CEO for Lululemon, The Wall Street Journal reported on Wednesday.
Lululemon and Elliott did not immediately respond to Benzinga‘s requests for comment.
Elliott would now be one of the largest investors in the company, which has a market value of about $25 billion.
Neilson, also a former finance chief at handbag-maker Coach, joined Ralph Lauren in 2016 and departed in March. She contributed to enhancing the fashion label’s e-commerce and direct-to-consumer performance.
Lululemon recently announced the resignation of CEO Calvin McDonald in January after seven years in the role, without naming a successor. The company is under pressure to rectify various issues, from product quality to its brand image. Founder and largest shareholder Chip Wilson had also urged the board to urgently appoint a new CEO, criticizing it for failing to plan effectively for the company’s future and succession.
Elliott, the biggest activist investor, is known for taking sizable stakes and pressuring companies to boost shareholder value through cost cuts, board changes, and strategic shifts. Its campaigns have targeted firms such as PepsiCo (NYSE:PEP), Phillips66, and BP plc (NYSE:BP).
See also: BP Appoints First Female CEO In 116-Year History As Auchincloss Steps Down In Less Than Two Years
Earnings Beat Despite Challenges
Lululemon’s recent performance has been a mix of highs and lows. Despite sluggish North American sales, the company reported a strong Q3 earnings beat and raised its full-year outlook. This was attributed to robust international sales, which surged by 33%.
However, the company has faced criticism for straying from its yoga-inspired roots, which has led to a decline in comparable sales. This shift in product design has been a point of concern for analysts, who have warned that it could pose risks to the company’s business.
Despite these challenges, Lululemon has been identified as a high-conviction contrarian pick by ‘Big Short’ investor Michael Burry. Burry, who views the 2025 sell-off as “window dressing,” has expressed confidence in Lululemon’s potential for a significant surge in the coming years.
Benzinga’s Edge Rankings place Lululemon in the 9th percentile for quality and the 78th percentile for growth, reflecting its mixed performance. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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