Lululemon jumps as Elliott bets $1b ahead of CEO change
Lululemon Athletica shares surged nearly 8% in premarket trading Thursday after reports that activist investor Elliott Management has acquired a $1 billion stake and is backing former Ralph Lauren executive Jane Nielsen for a potential CEO role.
The move comes as current CEO Calvin McDonald prepares to step down after almost seven years, creating an opportunity for new leadership to reverse slowing growth and reconnect with younger shoppers amid rising competition from brands like Alo and Vuori, News.Az reports, citing Reuters.
Lululemon shares, which have dropped nearly 50% this year from a record high of $516.39 in December 2023, were trading at $224 before the bell. Nielsen, a retail veteran and board member at Mondelez, has previously served as CFO of Coach and said she is open to discussions with Lululemon’s board.
Founder and top shareholder Chip Wilson, holding a 4.3% stake valued at about $988 million, is actively involved in the CEO search, aiming to restore a product-first focus. Analysts say the company must accelerate product launches and appeal to Gen Z to reclaim its market edge.
Lululemon currently trades at a forward P/E of 16.37, compared with 11.88 for Gap and 16.81 for American Eagle, highlighting expectations for growth under new leadership.
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