Shares of Lululemon (LULU) rose more than 3 percent in Monday’s early trading hours after a Wall Street Journal report suggested that founder Dennis “Chip” Wilson, who stepped down last month as chairman, is working with Goldman Sachs (GS) on plans that may include shaking up the board of the high-end yoga apparel maker, selling his 27% stake or partner with private equity firms on a buyout.
Citing people familiar with the situation, the paper also said that while Wilson is looking at all options, so far he hasn’t made any decisions on further steps.
Last Wednesday, Wilson, who founded the company in 1998 by creating innovative designs using high-quality fabrics, lashed out at the retailer’s board, saying its new chairman and another director were too focused on short-term growth. Wilson said he wants the company to return to its roots by making product development a higher priority.
Lululemon has been trying to regain shoppers’ trust after a waning demand on core product and ongoing execution issues, on top of a cut from the company’s full-year forecast on June 12, pushed shares of the once high-flying yoga-wear retailer to the lowest level in three years. Since the beginning of 2014 Lululemon’s stock has lost 30% of its value. A Bloomberg article theorized that LULU’s recent PPS decline, which has left the ticker trading near its lowest earnings multiple since fiscal 2009, has made it much more attractive as an acquisition target.
The report floated VF Corp. (VFC), Adidas AG, and Nike (NKE) as the most likely candidates to consider acquiring the Vancouver-based firm.
Lululemon shares are up 3.73% today, trading at $41.72 as of 11:45AM EDT. LULU, which currently trades at a multiple of 20.70X FY 2016’s estimated earnings, has been steadily declining over the past year. Ticker is down more than 40% from its Oct 4, 2013 52-wk high of $77.75.
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