Lululemon Founder Chip Wilson Blasts Company’s Board for Short-term Focus

“I was hopeful that we would be able to create a balance at Lululemon between product and growth that would complement each other,” said Wilson, pictured to the left.  “Instead, I have found a palpable imbalance in board representation, which is heavily weighted towards short-term results at the expense of product, culture and brand and longer-term corporate goals. I believe this is impacting the company's prospects. My vote today sends a signal to the financial community that the company must address this imbalance if Lululemon is to fully recover.”

 

Wilson, who has himself been accused of damaging the brand with a series of off-the-cuff remarks, said he voted against the election of Michael Casey and RoAnn Costin to the company’s board.

 

 

Wilson founded the company in 1998 and expanded it from a small storefront in Vancouver to an international brand with more than 250 stores. He attributed the company’s success in part to a corporate culture he created that empowers employees and has pushed technical apparel beyond workout clothes to an everyday staple.

 

“After being asked by the Board to come back from Australia to help the company recover from the product recall last year, I have decided to vote against the re-election of the company's outside Board members. While I am excited about the new management team that I helped put in place, I am concerned that the Board is not aligned with the core values of product and innovation on which Lululemon was founded and on which the company thrived. As a 27 percent shareholder in the company, I believe change is now needed at the Board level to increase shareholder value.”

 

 

Wilson said he was asked by the company to return from Australia where he had been living to deal with a quality control issue that resulted in a recall last year of pants that accounted for 17 percent of the company sales. Since then, he has worked to focus the company's efforts on product and innovation, and overseen a shakeup in management that  resulted in a new CEO and a new head of product quality.

 

Michael Casey, a former Starbucks executive, recently rose to chairman of the board from lead director after Wilson announced his resignation. RoAnn Costin is President of a private Boston-based equity company that focuses on investing in early and expansion-stage consumer product and retailing companies.

 

While Wilson noted in his statement that he resigned as chairman of the board to focus on other ventures including Whil, Imagine1Day, and the Chip and Shannon Wilson School of Design at Kwantlen University, his departure came amidst the latest firestorm over remarks he made during a television interview, in which some said he attempted to attribute problems with the company’s recalled pants to the size of some women’s thighs.

 

In its own statement issued late in the morning, Lululemon’s board and management team responded that they have consistently focused on enhancing long-term shareholder value and will continue to do so.

 

 

The statement said the board is overseeing the company’s strategy, which includes focusing its product engine on innovation, and accelerating sustainable and controlled global expansion.

 

“By leveraging its design-led roots, strengthening its supply chain and providing an exceptional guest experience, we are confident that Lululemon, under new CEO Laurent Potdevin’s leadership, will provide guests with the high-quality, technical products they know and love and create value for shareholders,” read the statement. “Contrary to Mr. Wilson's assertions, Lululemon’s Board members are aligned with the company’s core values and possess the necessary expertise to successfully lead Lululemon forward.”