Lululemon paves way for founder to sell last shares
TORONTO — Chip Wilson left Lululemon Athletica Inc. months ago, but his power as company founder still seems to have sway over its stock.
The Vancouver retailer’s shares slid almost four per cent in premarket trading Thursday after Lululemon laid the groundwork for Wilson to cut his final ties with the company, filing paperwork allowing the entrepreneur to divest his remaining 14-per-cent stake. The Nasdaq-traded shares ended the day at $66.07 US, down 70 cents or 1.5 per cent.
“The divestiture finally eliminates Mr. Wilson’s disruptive influence over the company,” Sam Poser, analyst at Sterne Agee, said in a note to clients, suggesting investors should take advantage of any dip in the stock as a buying opportunity.
“This filing does absolutely nothing to change our thesis that the initiatives to improve the product and in-store experience are underway and will likely re-establish Lululemon as the pinnacle of the activewear space and the necessary investments are being made in 2015 to support the global growth of the brand.”
The move comes a year after Wilson’s public feud with Lululemon’s board, which saw him vote against the re-election of two returning directors, saying the board was straying from the retailer’s “core values of product and innovation.”
The company averted a proxy war last year when Wilson agreed to sell half his stake to private equity firm Advent International for $845 million US. In February, Wilson stepped down from the board to focus on growing his family’s budding apparel business, Kit & Ace.
“The prospectus supplement filed by Lululemon simply enables Chip Wilson to sell his shares in the future, if he chooses to do so, on the same basis as any other stockholder,” Terry Fahn, a Wilson spokesman, said in a statement Thursday.
It would not be surprising if the founder chooses to divest his remaining stake, about 20.1 million shares, worth about $1.3 billion US.