Activist investor Elliot Management has built a stake of more than US$1 billion (A$1.51 billion) in Lululemon, causing its stock to soar.
Following reports of the $1 billion stake, Lululemon shares rose nearly 8% in early trading on Thursday, while Elliot Management is working with Ralph Lauren executive Jane Nielson for a potential CEO role.
This comes as the athleisure brand's current CEO, Calvin McDonald, announced he will step down from his role on 31 January 2026.
Lululemon joined a string of retailers cutting their full-year earnings guidance in response to U.S. President Donald Trump’s tariffs, in fears of a slowing economy.
In the third quarter, the company found itself especially struggling to build growth in the Americas, its largest market.
Over the past year, Lululemon's stock has plunged 44.42%, underscoring investor concerns over the company’s struggles.
The activist investor has been working closely for months with Nielsen, a retail veteran, a source told Reuters.
"Lululemon is one of the most powerful brands in retail, defined by exceptional products, deeply engaged communities and significant global potential,” Nielsen said.
"I would welcome the chance to discuss this opportunity with the Lululemon board."
Analysts said for the company to bounce back, it would need to capture the attention of a Gen Z audience and streamline its supply chain to blunt U.S. tariffs, as much of its sourcing is tied to Asian factories.
The brand’s founder and largest individual shareholder, Chip Wilson, has criticised the company and called for an urgent CEO search.
Wilson’s 4.3% ownership is valued at US$988 million according to LSEG data.
At the time of writing, Lululemon (NASDAQ: LULU) stocks have risen 3.48% to US$215.11. Its market cap is US$26.33 billion.
