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Lululemon Taps Nike Veteran to Rescue Falling Stock
23 Apr
Summary
- Nike executive O'Neill appointed new Lululemon CEO on September 8.
- Company shares dropped 7% after market; down 21% year-to-date.
- Past product issues and weak sales outlook challenge the new leadership.
Lululemon announced that O'Neill, previously Nike Inc.'s president of consumer, product and brand, will assume the CEO role on September 8. This transition follows Calvin McDonald's departure in January. The company's stock experienced a notable decline, dropping as much as 7% in post-market trading and falling over 21% year-to-date.
O'Neill inherits a company grappling with recent setbacks. Product issues, including the embarrassing sale of transparent leggings, and a weak sales forecast have worried investors. Lululemon has seen its sales growth decelerate, losing ground to more fashionable rivals.
Activist investor Elliott Investment Management, which holds over $1 billion in Lululemon stock, had favored Jane Nielsen for the CEO position. Lululemon's founder, Chip Wilson, also a major shareholder, has publicly expressed dissatisfaction and called for board changes.
O'Neill was previously considered a potential successor to John Donahoe at Nike, indicating his experience and readiness for a top leadership role.
