“Lululemon has lost its way and I believe a call to action is needed,” he wrote, saying the brand has given up market share “in the midst of the greatest change in the way people have dressed in the history of the world.”
He continued, “Lululemon created the global athleisure market (which I refer to as ‘streetnic’—stretch, technical, street—market) and seeded a revolution in the way we all dress. But we are just at the beginning. We cannot continue to cede the market opportunity we created to Under Armour and Nike.”
Wilson, who founded Lululemon in 1998 and was chief executive officer until 2005, resigned from the board last year but remains the brand’s biggest shareholder, with almost 14.2% of its stock.
The open letter was released—along with a website called Elevate Lululemon—after the board allegedly denied Wilson’s request to address shareholders for 10 minutes at this year’s annual general meeting, taking place Thursday.
“I feel strongly that our current board and management team must clearly articulate and execute a strategy with urgency towards regaining Lululemon’s competitive advantage and profitable growth and they must take responsibility,” he wrote, pointing out that three years ago Lululemon’s stock was double the value of Under Armour’s; today it’s worth less than half. “Since December 2013 when the current management team was appointed by this board, Lululemon stock has dramatically under-performed the market and its peers.”
It’s not the first time Wilson has come to blows with the board. In 2014 he voted against the election of two members and pushed for the board to be declassified. The dispute was resolved when he agreed to sell half his stake in the company to private-equity firm Advent International, which was granted two board seats. Wilson also signed a two-year non-disparagement agreement as part of the deal and said he wouldn’t stage a proxy fight or hostile takeover of the company until after its 2016 shareholder meeting.
“Management competence is uninspiring at best. I am not convinced we have the right leadership in place to catalyze the change necessary to win in the current global, multi-channel and dynamic environment,” he wrote, adding, “We have witnessed a dramatic erosion of the company’s unique culture and capability that empowered and embraced innovation, technology and product development. This culture and what it accomplished fueled our brand positioning, margins and growth.”
Noting that the company’s current board and management team have not created shareholder value in three years, he asked that the board be declassified.
“In closing, as a long-term investor in Lululemon, I am uncomfortable with the lack of urgency, stewardship and performance of our great company. I have not heard a strategy nor seen actions that lead me to believe we will regain our competitive position and secure long-term returns. This is unacceptable and the board needs to understand that I—indeed all shareholders—will be watching closely,” he concluded.
“As evidenced by our strong operational performance, we have the right board of directors and leadership team in place with the broad and deep expertise necessary to support the execution of our strategic five-year plan,” Lululemon responded in a statement sent to Buzzfeed. “This solid foundation gives us the tools to innovate and create as we deliver long-term sustainable growth for all stakeholders.”
Earlier this year, Lululemon posted fourth-quarter sales of $704.3 million, an increase of 17 percent from the $602.5 million achieved in the year-ago period, while profit increased from $110.85 million to $117.4 million.