By Aishwarya Venugopal
March 18 (Reuters) – Lululemon founder Chip Wilson, who is in a proxy battle with the company, said on Wednesday lead director David Mussafer’s decision to exit the board was “a step in the right direction”, but reiterated the need for a “substantial” board refresh.
The athleisure wear maker, which is still awaiting a permanent CEO, on Tuesday appointed Levi’s veteran Chip Bergh to its board and said he would stand for election at Lululemon’s shareholder meeting in lieu of Mussafer, who is not standing for re-election at the conclusion of his current three-year term.
Wilson had previously questioned Mussafer’s re-election, citing a conflict of interest as he oversees the process to interview board nominees.
“I want to be clear that while yesterday’s announcement is a step in the right direction, glaring governance deficiencies remain,” Wilson said in a statement, adding that Bergh’s appointment was “underwhelming”, as the board has said previously that other highly qualified candidates declined to join amid the proxy fight.
Bergh helmed Levi Strauss for more than 12 years, overseeing its turnaround and its return to public markets in 2019.
On Tuesday, Lululemon said his appointment reflects the board’s “commitment to ongoing refreshment”. Bergh joins Lululemon’s 10‑member board, which is set to shrink to nine after Mussafer said he would not seek re‑election.
Wilson is one of the biggest independent shareholders of Lululemon with a 4.27% stake and had last year nominated three independent directors — Marc Maurer, Laura Gentile and Eric Hirshberg — to the board and has pushed for several changes at the struggling apparel company.
“Significant change is still needed at the board level before a new CEO can be selected,” Wilson added.
Lululemon did not respond to a request for comment following Wilson’s statement.
Shares of Lululemon were up about 2% on Wednesday, reversing premarket losses. Its shares have lost nearly two-thirds of their value in the past two years as design missteps and a lack of brand freshness led to market share losses and ultimately to CEO Calvin McDonald’s exit earlier this year.
At least nine brokerages cut their price targets on the stock after the company forecast muted annual sales and profit on Tuesday.
“Until a credible CEO is in place to reset strategy, organizational design, and accountability (especially in North America) investors are left underwriting hope,” Jefferies analyst Randal Konik said.
Activist investor Elliott Management has also been pressuring the company by putting forth former Ralph Lauren CFO Jane Nielsen as its CEO candidate. Elliott did not respond to a Reuters request for comment.
(Reporting by Aishwarya Venugopal and Savyata Mishra in Bengaluru; Editing by Devika Syamnath)
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