Lululemon shareholders shut down Chip Wilson's shakeup
Wilson was overruled in attempt to prevent re-election of two board members
Shareholders of Lululemon Athletica Inc. have re-elected the two directors that company founder Chip Wilson wanted to oust from the board.
Chairman Michael Casey, a former Starbucks executive who recently replaced Wilson in the role, and director RoAnn Costin, a private equity executive, were kept in their positions, after Wilson announced earlier in the day that he voted against them, saying they don't align with the company's "core values of product and innovation."
Wilson wanted a shakeup among company board members, saying a change is needed to increase shareholder value.
The company has had to deal with the fallout from a style of yoga pants that had fabric which was sometimes see-through and a drop in its stock price.
- Lululemon to be cleared in lawsuits over sheer pants
- Lululemon founder Chip Wilson says pants 'don't work' for some bodies
- Lululemon recalls pants for being see-through
Wilson says he voted against the re-election of former Starbucks executive Casey and RoAnn Costin, president of a private U.S. equity company, adding the company's board is weighted towards short-term results at the expense of product, brand and long-term corporate goals.
He says his vote against the two directors sends a signal to the financial community that Lululemon must address the board member issue if the company is to recover.
However, the majority of shareholders didn't agree with him, and neither did the company's 13 officers and directors.
"Contrary to Mr. Wilson's assertions, Lululemon's board members are aligned with the company's core values and possess the necessary expertise to successfully lead Lululemon forward," the company replied, also in a statement released before the annual meeting.
It added that Lululemon aims to "strengthen the company's foundation, focus its product engine on innovation, and accelerate sustainable and controlled global expansion."
The annual meeting was the first for new Lululemon chief executive officer Laurent Potdevin, the former president of Toms Shoes, who was hired late last year in the aftermath of the yoga retailer's supply chain problems related to a style of yoga pants that had fabric which was criticized for being too sheer.
That was followed by a public relations gaffe, when Wilson said in a TV interview in early November that, "some women's bodies just actually don't work" for Lululemon's tight-fitting pants. He issued a video apology on Lululemon's YouTube video channel a few days later, which quickly went viral.
Wilson resigned as board chair in December and was replaced by Casey.
Lululemon has been striving to move past the controversy and shift the attention back to its products and the deeply ingrained yoga culture.
Andrew Burns, an analyst at D. A. Davidson & Co. in Portland, Or., said he believes the company has the potential to stabilize its financial results later this year.
"If I look at what they've done since (Wilson) announced he was stepping off the board, they've ramped up their product quality team, they've attempted to reinvigorate the design process as they were the clear leader three years ago in the space," Burns said.
"They're plucking away on their turnaround strategy and need a couple more quarters to see if it works or not."
Shares of the company have been steadily sinking over the past year, and are down more than 40 per cent from their 52-week high of $77.75 US on the Nasdaq in early October, trading at $44.33 on Wednesday.