lululemon He is showing his teeth.
The Vancouver-based sportswear company is going public with its battle with activist founder Chip Wilson, writing in a letter to shareholders on Monday that it has “outdated perspectives” and “concerning conflicts of interest” that will derail its turnaround plan, materials reviewed by CNBC show.
The letter, Lululemon's first major public response to Wilson since their proxy battle escalated late last year, comes after settlement talks with the retailer's founder collapsed last week, materials reviewed by CNBC show. The letter explains why the company's strategy, its incoming CEO, Heidi O'Neill, and its board nominees are ultimately in the best interest of shareholders, as it urged them to vote in its favor and set June 25 as the date for its long-awaited annual meeting.
“Wilson, who stepped down from the Board more than a decade ago for well-documented reasons, has been attacking the company and the Board for many years, damaging the brand and harming shareholders. He has now put forward three opposing nominees in an attempt to regain greater influence over the company he has coveted since he left,” states the letter, seen by CNBC.
“Its board of directors firmly believes that replacing any of lululemon's directors with Mr. Wilson's less qualified nominees would support his misguided perspectives, deprive the company of critical skills and experience, and risk derailing our progress at an especially crucial time for our business and organization.”
Wilson did not immediately respond to a request for comment.
Lululemon's business has been under pressure for about two years, particularly in America, its largest market, as it navigates the impact of tariffs, an unstable American consumer and a product range that has failed to wow shoppers in the same way it did before. It has also faced stiff competition in the athleisure space from startups like Vuori and Alo Yoga as the global athleisure market began to cool.
Reporting fiscal fourth-quarter earnings in March, Lululemon issued weak fiscal 2026 guidance and warned that higher tariffs and its proxy battle with Wilson would hurt its results. As of Friday's close, shares are down nearly 43% this year.
Wilson, who founded Lululemon in 1998, stepped down as CEO in 2005 but remained as president until 2013, when he left after blaming customers for a recall of his signature black pants. She told Bloomberg at the time: “Some women's bodies don't work in pants.”
“It's really about the rubbing of the thighs, how much pressure there is over a period of time,” he said.
Wilson has been a frequent critic of the brand in the years since, but stepped up his attacks late last year as Lululemon's challenges mounted. His biggest complaint has been the company's board of directors, whom he blames for his decision to step down as chairman in 2013, and he has been pressuring both the company and shareholders to back his slate of nominees.
In response, Lululemon claimed its leadership is the reason the brand has been able to scale to become an $11 billion retailer, and argued that Wilson is aligned with direct competitors, including Alo Yoga and Vuori, both of whom Wilson admitted to advising, security filings show.
At Lululemon's annual meeting next month, shareholders will be presented with two sets of director election options that both sides are betting can help turn the company around. Shareholders can vote to elect the retailer's candidates, former Levi Strauss CEO Chip Bergh, former Unilever Esi Eggleston Bracey, chief growth and marketing officer, and former board member and former Gap Chief Financial Officer Teri List. Or they can go with Wilson's nominees, former ESPN CMO Laura Gentile, former Activision CEO Eric Hirshberg and former In co-CEO Marc Maurer.
Wilson has said the retailer's decline is the result of “deprioritizing creative excellence at the altar of efficiency.” The solution, he argued in a letter to shareholders last week, is “more creative and proven leaders” in the boardroom.
“Our three nominees understand what it takes to foster a creative, focused and successful business that delivers superior returns through creative excellence – in design, technology and execution,” Wilson wrote. “[They] “We have all led organizations that only succeed when they outperform their competitors, and know what it takes to create an inspired and creative organization and help it thrive.”
Last week, Lululemon made a final attempt to resolve its proxy dispute with Wilson and reach a settlement, materials seen by CNBC show. He offered to appoint two of Wilson's nominees after the annual meeting, up from an earlier offer of one, and agreed to appoint a third new director, not from his list but subject to his approval. The company also said it would create a branded products advisory board that would include Wilson's third candidate not appointed to the board.
In response, Wilson escalated his demands, asking for the right to replace directors if his nominees left the board and full reimbursement of his campaign by the company, among other requests, materials seen by CNBC show. Lululemon rejected that offer and settlement talks failed.
Now, Lululemon argues in the letter that its nominees are “far superior” to Wilson's and that choosing any of the founder's picks “would result in a significant downgrading of the experience and expertise of its board of directors, including the loss of deep industry and corporate governance expertise, as well as financial expertise required for a public company.”
He criticized Gentile, Hirshberg and Maurer for having no experience on public company boards and for having little or no time working in the textile and retail sector.
He noted that Maurer, who about a year ago resigned as co-CEO of On, a direct competitor of Lululemon, still has a personal stake in his former company worth tens of millions of dollars, representing “a sizable portion of his net worth.”
The company also came to the defense of its incoming CEO, who will take the helm in September after nearly 30 years on the job. Nike
When Lululemon announced last month that O'Neill was its choice as its next CEO, Wall Street sold off shares fearing that she was partially responsible for some of the challenges Nike currently faces. There are also concerns that he won't begin his role for several months, which will delay the recovery timeline more than some investors expected, especially given Lululemon's long merchandise delivery times.
“A veteran of almost 30 years of [Nike] “It is not the symbol of creative, transformative leadership that can instill shareholder confidence in today's world,” Wilson wrote in an April 29 letter to shareholders. “Shareholders are right to question whether she has the product skills or track record of value creation needed to revitalize Lululemon.”
In response, the retailer said in its letter to shareholders that O'Neill is “the ideal executive to lead” the company and brings a “unique balance of creativity and operational discipline needed at this crucial time.”
“When the Board initiated the CEO search, we established criteria that encompassed both the turnaround and growth experience. We recognize that there are parts of lululemon's business that need a reboot, but that should not be the end. The lululemon brand remains fundamentally strong and there is significant potential to innovate and evolve products and engage our communities to scale the business even further across businesses and internationally,” Lululemon wrote.
“During the months-long interview process, Ms. O'Neill distinguished herself with a rare combination of deep industry, product and brand experience, as well as her strong track record of transformation and growth at scale. She demonstrated an ability to clearly articulate the essence and future opportunity of the lululemon brand, while bringing a pragmatic, execution-oriented mindset,” the company added in the letter.
Lululemon highlighted O'Neill's many years of experience leading Nike's apparel business during a period of rapid growth and the time spent reducing product lead times and reestablishing the brand before his departure.
“O'Neill established and built Nike's women's business and turned it into a multi-million-dollar franchise,” Lululemon said. “And she led major digital transformations as an early digital champion and innovator, during a period of rapid digital commerce sales growth of more than 65%.”
