The Scoop

Lululemon founder-turned-activist Chip Wilson is trying to excise private equity firm Advent from the beleaguered athletic apparel company’s board as part of an ongoing proxy fight.

Wilson, who quit Lululemon’s board in 2015 but remains the company’s second-biggest shareholder, launched a proxy war late last year in a bid to remake the board while it looked for a new CEO. While Wilson has said he doesn’t want a board seat for himself, he is making it clear that he will not consider any settlement with the company unless two legacy Advent-linked directors, including David Mussafer, resign, according to people familiar with Wilson’s thinking.

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Advent has had a long and successful relationship with Lululemon and Wilson. It was a partnership that helped Lululemon go public, made Wilson one of Canada’s wealthiest businessmen, and minted billions for both parties.

But Wilson has soured on Advent in recent years, and now views the private equity firm’s influence and lingering presence as a personification of Lululemon’s ailments. He lays Lululemon’s “loss of cool,” as Wilson wrote in a WSJ ad last year, at the feet of Mussafer’s focus on appeasing Wall Street analysts rather than thinking ahead about what customers will want to wear, the people close to him say.

Wilson has singled out the continuing presence of Advent managing partner David Mussafer, who is Lululemon’s lead independent director, and Lululemon chair Marti Morfitt, as making any settlement deal impossible, those people said. Mussafer took his seat as part of a deal Advent struck with the company more than a decade ago; Morfitt, while not formally affiliated with Advent, was brought onto the board of another Advent portfolio company and is seen by Wilson as working in lockstep with Mussafer. (The separation of Lululemon’s board chair and lead independent roles itself is a legacy of that deal Advent struck.)

Wilson’s frustrations are compounded by Advent’s spotty record in the consumer space, the people say ; another Advent name, the haircare brand Olaplex, has seen its stock collapse since its 2022 IPO. (Mussafer and two other Lululemon directors are also on Olaplex’s board.)

Wilson has publicly nominated three candidates to Lululemon’s board, including former On Running co-CEO Marc Maurer and ESPN’s ex-marketing boss, Laura Gentile.

Wilson isn’t alone in his activist fight at Lululemon, whose shares have halved over the last year. Activist investor Elliott has a more than $1 billion stake and is also mounting its own campaign, according to another person familiar with the matter. Neither Elliott nor Wilson have had substantive contact with each other, some of the people said.

A spokesperson for Wilson declined to comment. A representative for Lululemon also declined to comment. The company previously told The Wall Street Journal that it has “engaged extensively” with Wilson but that he declined the board’s offer to evaluate his nominees privately.

Step Back

Wilson founded Lululemon in 1998, helping to create an entire category around athleisure and laying the groundwork for what would become a $24 billion company. But most of his tenure was marked with controversy and board disagreements over how to run the business.

In 2005, Wilson stepped down from the CEO role, selling nearly half the company to Advent and Highland Capital Partners for $93 million. Two years later, the company went public and Wilson made billions — but clashes between Wilson and the board continued for years. In 2014, following the now-infamous see-through yoga pants episode, Advent again stepped in to buy half Wilson’s stake for $845 million. In return, Advent got two board seats and Mussafer became co-chairman of the board. (Wilson stepped down from the board in 2015 and Advent has since sold down its stake in the company.)

While Lululemon’s shares soared for most of Mussafer’s time as chair, US sales have stalled and competitors like Vuori and Alo Yoga have stolen market share. The company is searching for a new CEO to stage a turnaround.

Rohan’s view

The founder’s dilemma is real: Monetizing a business often means yielding control. People like Starbucks’ Howard Schultz (technically not the founder, but might as well have been) never really could let go of his baby and struggled with most of his successors. That’s why Meta’s Mark Zuckerberg and his tech brethren have opted for dual-class structures that protect their control while making them wealthy.

Wilson doesn’t have either of those options — and despite the fact that many of his frustrations stem from Wall Street-types mucking up a culture of cool that he pioneered, he’s turning to a decidedly Wall Street maneuver to fix what’s broken at Lululemon.

Room for Disagreement

Retailers and consumer brands are inherently emotional, and make their money by winning consumer’s hearts, with their wallets following shortly thereafter. While tech founders can sell their upstarts and just launch another company, it can be harder for founders of consumer brands to just step aside and watch their brands melt away.