During holiday weekends, there’s rarely any respite at Lululemon in Dallas, Texas. It’s one of the busiest stores in the upscale mall on Black Friday, filled mostly with teenagers flashing their parents’ credit cards and middle-aged women shopping for new Pilates outfits. While holiday sales won’t be tallied for some time, the retailer’s revenue is expected to reach a record $11 billion by 2025. In the latest quarter, sales in North America fell 2%, but overseas revenue rose 33%, for an overall increase of 7%.
Lululemon is not exactly the failing brand that its controversial billionaire founder, Chip Wilson, continues to ridicule years after his departure. But as anyone who’s followed Wilson’s rants knows, things haven’t been great lately for the iconic yoga brand and its shareholders. Lululemon’s market capitalization peaked in December 2023, at $64 billion. Since then, shares have fallen 59%, slashing its valuation to $25 billion. So it wasn’t entirely surprising when Lululemon recently announced the resignation of its CEO, Calvin McDonald, in January, or that the announcement, made in conjunction with the company’s strong quarterly results, sent the stock up 11%.
Wilson, whose Lululemon stock value soared by $180 million to $2.1 billion in a single day, responded with comments that were both disparaging and triumphalist. “After years of poor decisions that eroded the brand and destroyed shareholder value,” he wrote in a self-published press release, “it is clear to me that only under my increasing pressure has the Lululemon Board of Directors (the “Board”) finally begun to listen.”
With McDonald’s departure, Wilson appears to have achieved a major victory in his long battle with his former company, but it’s not over yet. Lululemon’s board of directors has not announced a clear succession plan, he says. The company needs to recruit fresh and experienced directors to advise on the selection of the CEO.
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Lululemon’s billionaire founder ousted his CEO, but their ‘battle’ continues
In a document filed with the SEC on Monday, Wilson made clear that as an industry veteran with extensive experience at Lululemon and as its largest individual shareholder, with 8.4% of the shares, he would not hesitate to take steps to revamp the board of directors if his suggestions are ignored. (Lululemon did not respond to the request for Forbes for commenting on Wilson).
“It could just be a threat,” says David Swartz, a Morningstar consumer analyst who covers Lululemon. “He may want to be on the board. But there are a couple of problems. First, I’m pretty sure the Lululemon board doesn’t like him very much. Second, he might have a conflict with his relationship with Amer Sports, which could be considered, to some extent, a Lululemon competitor. (Wilson) owns more shares in that company than in Lululemon.”
Wilson has long been a relentless critic of the brand athleisuredespite not having been involved with the company for over a decade since being ousted in 2013 (and officially leaving entirely in 2015), having been criticized for attributing an issue with sheer leggings to “some women’s bodies.” He has sold 75% of his shares since splitting from Lululemon and has been making billions of dollars in other companies and investments. Despite this, he can’t seem to let go of his relationship with the brand that acts ambivalent towards him at best and hostile at worst. He has also been very combative. In 2024, he criticized diversity in Lululemon advertising, calling the models in some ads “unhealthy,” “sick,” and “uninspiring.” In October, he took out a full-page ad in The Wall Street Journal titled “Lululemon: In a Nosedive.”
Part of Wilson’s discomfort could simply be attributed to his own results. At Lululemon’s peak in December 2023, its 10 million shares were worth more than $5.2 billion; Now they are worth 2.1 billion. (If you had kept the 40 million shares you owned in about 2014, when you left the company, you would have Lululemon shares worth more than $8.3 billion.) As the company’s largest individual shareholder, no one has lost more wealth over the past two years thanks to Lululemon shares than Wilson.
Then again, it’s clearly not just about dollars. He’s been complaining for almost a decade that the brand has lost its way, even as sales skyrocketed from about $1.8 billion in 2014 to $11 billion without him at the helm, while shares soared 220%, even despite the difficult last two years. In 2016, Wilson complained that Lululemon had “lost its way” in an open letter to the company. In 2017, he bought an ad on a bus stop in front of Lululemon’s headquarters, urging the company to buy rival Under Armour. By the end of 2020, the stock was five times its 2015 price, but Wilson remained displeased, claiming last October that Lululemon’s 2020 decision to acquire home fitness brand Mirror “wasted $1 billion” on the $500 million purchase. “You can say what you want, but the numbers show the company doesn’t need it,” Morningstar’s Swartz told Forbes in the rise of the company. Now, with Lululemon suffering from a decline in sales due to the predictability of its products and increased competition, things could be changing.
“By most measures, you could say the last seven years have been successful for Lululemon despite the recent problems,” Swartz says. “The reality is that this industry — sportswear in general and women’s sportswear in particular — has become much more competitive in recent years.”
Smaller, faster-growing clothing brands like Vuori and Alo Yoga have been stealing market share from Lululemon. Alo, which relies on celebrity endorsements and relies on the appeal of streetwear, has grown from 10 to 15 stores in 2021 to more than 130, and is estimated to have increased its revenue tenfold since the pandemic. For its part, Vuori has surpassed $1 billion in revenue across its more than 100 stores thanks to a product offering that rivals Lululemon’s in quality and its initial marketing as a men’s sportswear brand.
“If several different companies are chasing the same customers and generating sales in the hundreds of millions or billions, even the largest companies in the industry will notice to some extent,” Swartz says. “It will accumulate.”
Meanwhile, persistent inflation has hurt consumers, who have turned to cheaper brands than Lululemon, whose classic Align leggings cost more than $100. This has put pressure on Lululemon’s market position, says Brittany Steiger, retail and e-commerce analyst at Mintel. Brands like American Eagle’s Aerie have taken advantage of the situation and diversified their product offerings, from underwear to more affordable sports alternatives.
Luluemon, for its part, has responded by expanding beyond women’s sportswear, encompassing products such as men’s clothing and accessories. In 2022, the brand announced that menswear would drive a five-year plan to grow its revenue to $12.5 billion by 2026. In 2024, menswear accounted for about 25% of the company’s annual revenue.
Wilson believes it is precisely the wrong decision. A serial entrepreneur, he founded Lululemon in Vancouver, Canada, in 1998 with a simple idea. After taking her first yoga class after a back injury, she noticed that her instructor’s clothing was thin and see-through. I wanted to create high-end yoga clothing designed specifically for women (back then, many sportswear companies made clothing for men and simply tailored it for women). As athleisure gained popularity in the late ’90s and early ’00s, Lululemon became synonymous with high-end yoga pants and continued to grow, while battling a series of Wilson controversies until he was ousted, first as president in 2013 and then from the board entirely two years later. Now, much of its lobbying campaign to transform the brand is focused on getting back to basics. “Return the product and the brand to the center,” he demanded in his October ad in the WSJ . “On paper, Lululemon still looks good, but it is losing its soul.”
Despite all this, Wilson is almost as rich as he was in Lululemon’s heyday in 2023, thanks to the success of Amer Sports. He invested around $1 billion to buy a roughly 21% stake in Amer in 2019, and it has paid off. The company, a multinational sporting goods company originally founded in Finland as a tobacco company by four groups of students, went public on the New York Stock Exchange in 2024. Revenue reached $5.2 billion that year, up 18% from the previous year, thanks to dominant tennis brand Wilson and premium outdoor clothing brand Arc’teryx. Wilson, who is on Amer’s board of directors, now has a stack of shares in the company worth about $3 billion, nearly $1 billion more than his Lululemon shares, as Amer shares have risen 194% since the IPO. He has also poured money into other fashion businesses such as Sheertex and his real estate investment firm Low Tide, and has pledged $100 million to resolve facioscapulohumeral muscular dystrophy (FSHD), a rare form of muscular dystrophy that Wilson has suffered from for decades.
But no matter what, there’s one company that looks bigger than the rest, whether its stock goes up or down: “The world doesn’t need another bland, quarterly-reported clothing company,” Wilson wrote in October. «You need a bold vision. “It needs to get Lululemon flying again.”
This article was originally published on Forbes US.
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