Lululemon founder Chip Wilson.
The founder of the yoga-wear retailer Lululemon Athletica Inc. is attempting to remove two board members, claiming they’ve led the company away from its strongest values.
Chip Wilson, who owns 27 per cent of Lululemon’s shares, said he will vote against the re-election of former Starbucks executive Michael Casey and RoAnn Costin, president of a private U.S. equity company, at the annual meeting on Wednesday afternoon in Vancouver.
He said both executives need to be replaced to increase shareholder value.
“I believe change is now needed,” Wilson said in a statement.
“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.”
He said his vote against the two directors sends a signal to the financial community that Lululemon must address the board member issue if the company is to recover.
Wilson’s public criticism comes afterhe left most of his responsibilities at the Vancouver-headquartered company late last year, in the wake of a scandal over comments he made about overweight customers and numerous changes in its executive and management ranks.
He founded the company in 1998 and remains a board member, but recently stepped down as chairman.
Lululemon issued their own statement that challenged Wilson’s remarks.
“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,” the company said.
It added that Lululemon aims to “strengthen the company’s foundation, focus its product engine on innovation, and accelerate sustainable and controlled global expansion.”
Those changes have been underway for several quarters and are unlikely to be derailed by the efforts of a “disenfranchised founder” to remove certain board members, suggested Andrew Burns, an analyst at D. A. Davidson & Co. in Portland, Or.
“If I look at what they’ve done since he announced he was stepping off the board, they’ve ramped up their product quality team, they’ve attempted to reinvigorate the design process as they were the clear leader three years ago in the space,” Burns said.
Burns said he believes the company has the potential to stabilize its financial results later this year.
“They’re plucking away on their turnaround strategy and need a couple more quarters to see if it works or not,” he added.
Lululemon has been striving to move past a barrage of controversy that soiled its reputation as a grassroots company as passionate about yoga as for profits.
During the past year and a half, attention shifted from its deeply ingrained yoga culture to concerns over the quality of its products, as the company dealt with the fallout from a style of yoga pants that had fabric which was criticized as being too sheer.
While Lululemon pulled the black Luon pants from its shelves, the controversy stretched on for months as it fired managers directly involved with product quality, and faced the exit of longtime CEO Christine Day.
Late last year, comments from Wilson on a conference call resurrected the controversy, as he suggested that “some women’s bodies just don’t actually work” for Lululemon yoga pants. He later apologized for the remarks in a video posted on YouTube.
