The chakras are well and truly out of alignment among the board members of global athleisure powerhouse Lululemon. They collectively declared open war on the controversial founder who started the fitness-adjacent empire from a yoga studio in Vancouver: Chip Wilson.
But the most startling revelation from the public statements and corporate filings that emerged this week is that the Lululemon board came so close to reaching a peace agreement with Wilson.
Wilson’s public criticisms of the business date back more than a decade, but his campaign has now found fertile ground after the group’s recent stumbles which have seen the stock plunge more than 40 per cent this year to lows not seen since 2019.
Underlying sales in the US have gone into reverse – not helped by the latest ‘see through’ controversy, with customers lashing the retailer on social media about its new yoga tights being so sheer their underwear was visible – or worse.
You might expect that from Kmart’s $7 Anko leggings, but not Lululemon’s $159 version.
It might explain why Lululemon’s directors contemplated supporting Wilson – who is its largest single shareholder but owns less than 10 per cent of the business – and his bid to have three nominees on the board by October.
In return, Wilson would agree to vote in line with the board’s plans and not disparage them for a period of two years.
The board clearly values their peace.
And who wouldn’t when you’ve got someone as loud and prominent as Wilson, who said earlier this year that the company needs massive disruption and suggesting “the whole board can step down”.
Lululemon’s board, led by executive chair Marti Morfitt, was prepared to try and look past all of this, but said the peace deal fell over when Wilson made fresh demands, and the leisurewear group’s directors lost confidence that he would keep the peace under any deal.
The board’s sudden reversal needed some explaining. And the directors obliged with an all-out attack on Wilson that spelt out why he should not have any association with the company, full stop.
This included accusations he was an unreliable negotiator who “reneged – again – on previously agreed terms” and engaged in “disruptive, brand-damaging tactics”.
There were also his outdated views, “skewed understanding of public company governance” and more importantly, his conflict of interest due to involvement with companies in direct competition to Lululemon, such as ascending arch competitor Alo Yoga, which he has advised.
“No competent public company board would ever give a direct competitor as much influence or insight into strategy and future product plans as Mr Wilson has demanded,” the directors said.
It is a remarkable turn for a board that was negotiating to give him significant control over the company barely a week ago.
One criticism in particular ought to concern investors and customers, as it goes to the heart of what kind of business Lululemon needs to be.
Lululemon’s board highlighted one of the most controversial comments Wilson made about the business, which led to his ousting as chairman in December 2013, and his departure from the board in 2015.
In response to the first of Lululemon’s trifecta of ‘see through’ sagas – where the group’s high-tech, high-priced leggings proved transparent in certain yoga poses – Wilson suggested the problem lay with a category of unwelcome customers.
“Some women’s bodies just actually don’t work” for Lululemon’s clothing, Wilson told Bloomberg at the time.
It became a rolling disaster for Lululemon as he later apologised to his employees, saying he was “sad for the repercussions of my actions,” but apparently did not apologise to female customers.
US comedian Stephen Colbert roasted Wilson on his TV show, naming the Lululemon founder his “Alpha Dog of the Week,” and cheekily suggested that fat-shaming Lululemon customers was a marketing ploy to get them to buy more pants.
It is clearly not a position that Wilson has abandoned.
In 2024, he blasted Lululemon on its approach to the “whole diversity and inclusion thing,” complaining the company was trying to become everything to everybody, like casual wear retailer The Gap.
“You’ve got to be clear that you don’t want certain customers coming in,” he said.
That statement led to yet more apologies from the company amid calls for a boycott.
Sanity appears to have prevailed, but the interesting part will be how many investors decide to back Wilson and his candidates for the board, and not the rival trio backed by Lululemon’s directors, which includes former Levi Strauss boss Chip Bergh.
With the stock trading more than 65 per cent below its record highs in 2024, they are right to be nervous.
Wilson, for his part, is playing the unusual role of conciliator: “There is no reason why we cannot reach a resolution to this fight quickly,” he said after the board had abandoned the peace talks.
“The board has not provided me with detail on where our disagreements lie right now, but as of Friday last week, we seemed to be in full agreement on the principal terms.
“I remain undeterred and willing to be constructive.”
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.