Good morning. After a very public spat, Lululemon and its founder, Chip Wilson, struck a deal over the company’s future – more on that below, along with Canada’s summer forecast and America’s dwindling weapon stockpiles. But first:

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Lululemon has had a rough go of it lately. The Canadian athleisure brand surged to a US$60-billion valuation in 2023, after the pandemic convinced most of us to abandon hard pants. But over the past two years, Lululemon struggled to keep pace with trends, get a handle on dupes, manage quality control issues and fend off buzzy upstarts. Calvin McDonald was nudged out as CEO in December, then investors balked at his replacement, former Nike exec Heidi O’Neill. Shares tanked even further, with the current market value hovering around US$14-billion.

And no one has been as mad about this – like, the kind of mad that involves paying for trash-talking signs on giant trucks parked outside the company’s Vancouver headquarters; the kind of mad that explodes into a bitter proxy fight to revamp the board – as Lululemon’s founder, Chip Wilson.

But yesterday, the two sides managed to broker a peace deal. Lululemon announced it would appoint two of Wilson’s nominees to the board after all: former ESPN chief marketing officer Laura Gentile and Marc Maurer, former co-CEO of athletic brand On. In exchange, Wilson agreed to quit it with the trucks and the public disparagement. Their truce heads off a showdown at next month’s annual shareholder meeting, although it’s too soon to know if it will salvage a company that’s been coming apart at the seams.

Vested interests

Wilson hasn’t actually held an official role at Lululemon in more than a decade. He departed as CEO in 2008, then stepped down as board chairman five years later, after he insisted – you’ll remember these comments – that the brand’s too-sheer leggings were caused by women’s too-large thighs. (“It’s really about the rubbing,” Wilson said in a televised interview.) He left the board altogether in 2015 to help his wife and son build their clothing line, Kit and Ace.

Still, Wilson has kept a close eye on the company’s fortunes – which makes sense, given that he remains its largest individual shareholder. And he’s been keen, whether Lululemon likes it or not, to weigh in on business strategy. In 2017, Wilson bought a Vancouver bus-shelter ad urging Lululemon to acquire Under Armour, while in early 2024, he griped to Forbes that the brand’s “whole diversity and inclusion thing” meant it was “trying to become like the Gap.”

But as shares slid precipitously last year – more than 50 per cent by November, erasing at least US$2-billion of his holdings – Wilson started to ramp up his attacks. He bought another ad, this time in The Wall Street Journal, lambasting Lululemon as a “sinking ship” that had “lost its edge.” He took credit for McDonald’s ouster in December then swiftly launched a proxy fight to overhaul the board, nominating his own slate of directors. In a letter to shareholders, Wilson said Lululemon’s rival picks amounted to replacing “one Procter and Gamble bean counter on the board for another.”

By contrast, Lululemon kept pretty quiet for more than six months. Last week, though, the company went scorched earth on Wilson, calling his vision outdated, his ideas misguided and his persistent attacks damaging to the brand. Its statement also pointedly noted that Wilson “stopped serving on the board over a decade ago for well-documented reasons.” It added that choosing any of his “less qualified nominees” over Lululemon’s “vastly superior” candidates risked “derailing our progress in an especially pivotal time.”

Course correction

So how exactly did these two warring factions get to yesterday’s detente? Unclear: After all of the very public acrimony, everyone’s now opting for perfectly anodyne praise. Lululemon said it’s looking forward to the perspective that Wilson’s two nominees bring to the board. Wilson said that he’s excited about unlocking new value for shareholders. The company’s outlook did improve yesterday, with shares rising nearly 3 per cent.

The truce also gives Lululemon some time to regroup before September, when new CEO Heidi O’Neill starts the job. (Her non-compete agreement with former boss Nike explains the delay.) But she’ll have to work fast to rebuild Lululemon’s fortunes and, perhaps especially, to stay ahead of Wilson’s wrath. The non-disparagement clause he agreed to yesterday expires in 18 months.

Most of Canada can expect an inconsistently warm June, July and August – though the weather is shaping up to be hotter and drier than normal in the West. Read more about our summer forecast here.