Chip Wilson, the founder of Lululemon Athletica Inc., is not one to mince words.
Wilson, the company’s largest shareholder with a 14.2% stake, on Wednesday issued an open letter to investors in which he sharply criticized the apparel retailer’s management, calling its competence “uninspiring at best.” He called for annual election of the board to hold members accountable for Lululemon’s performance.
Declaring his love for Lululemon and its employees, Wilson said he remains the chain’s biggest believer and supporter.
“Unfortunately, Lululemon has lost its way and I believe a call to action is needed,” he wrote. “I feel strongly that our current board and management team must clearly articulate and execute a strategy with urgency towards regaining Lululemon’s competitive advantage and profitable growth and they must take responsibility.”
Wilson said he wrote the letter because the board denied his request to speak at the company’s annual shareholder meeting on Thursday. The executive resigned as chairman of Lululemon in 2013 following a series of controversies. Last year, he resigned from the board completely.
Wilson called for the Lululemon board to be declassified, which would mean the entire board would have to stand for re-election each year. The company currently has a staggered board, with three of 12 seats up for re-election at Thursday’s annual meeting.
“Boards are responsible for choosing the right CEO,” he wrote. “This board needs to be responsive to its shareholders. In that regard, I am asking the board to act in accordance with 90% of companies in the S&P 500 and declassify the board.”
In the letter, Wilson also expressed his displeasure about the company’s earnings.
“The most frustrating thing to me as a shareholder is the current management team’s dismal financial performance,” he wrote.
“Since this management has been at the helm, Lululemon has grown revenues by half a billion dollars. Yet net income has declined! Not one incremental dollar of earnings has flowed to the bottom line.”
Wilson cited his concern about the company’s direction at a time when the women’s athletic apparel market has been growing at a fast clip even as it become more competitive. He said that since December 2013 when the current management team was appointed by the present board, Lululemon stock has “dramatically under-performed” the market and its peers, citing Under Armour whose stock has increased 79% and Nike, up 45%.
“Yet Lululemon stock has dropped 8% in the midst of the greatest change in the way people have dressed in the history of the world,” Wilson said.
Claiming that Lululemon created the global athleisure market, Wilson said “we cannot continue to cede the market opportunity we created to Under Armour and Nike. The company’s greatest opportunities are ahead.”
In an emailed statement sent to Forbes, a Lululemon spokesperson said “we have the right board of directors and leadership team in place with the broad and deep expertise necessary to support the execution of our strategic five year plan.”