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.
“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.
Wilson is one of the biggest independent shareholders of Lululemon with a 4.27 per cent 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 down about two per cent in premarket trading on Wednesday after it forecast muted annual sales and profit. 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.
The latest forecast also did little to calm investors, who are still awaiting a permanent replacement for McDonald.
“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.
(Reporting by Aishwarya Venugopal; Additional reporting by Savyata Mishra in Bengaluru; Editing by Devika Syamnath)
