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Elliott’s Involvement Signals Potential Growth Opportunities for Lululemon Investors

Imagine your favorite sports team suddenly stops winning games, even though they have great players and a big fan base. That’s kind of what’s happening at Lululemon—a company known for its popular athletic clothes—but now, some big investors want to help the team get back on track.

What’s Going On With Lululemon?

Lululemon is a company that sells athletic clothes, shoes, and accessories. You might see their stores in malls or shop for their leggings online. They’ve become a go-to brand for people who like yoga, running, and looking sporty in everyday life. Lululemon is a big deal, worth about $24 billion on the stock market, and has stores across North America, China, Australia, and Europe.

But lately, things haven’t been going smoothly. Even though Lululemon’s global sales jumped from $8 billion in 2023 to nearly $12 billion today, its stock price has dropped from over $500 to below $220 per share. The main problem is that sales in North America—where most of their customers live—have started to fall.

Why Investors Care

When a company like Lululemon struggles in its main market, it can hurt the whole business. Investors who own Lululemon stock have seen the value of their investment drop sharply. If you own shares in companies like this, or in funds that include retail or athletic brands, these changes could affect your portfolio’s value.

That’s why big investment firms like Elliott Investment Management are paying attention. Elliott bought more than $1 billion worth of Lululemon stock and wants to help the company make a comeback. They’re even suggesting Jane Nielsen, a leader with experience fixing other struggling brands, as a new CEO.

Bulls: Why Some Investors See Hope

  • Strong International Growth: Sales in Asia and Europe are growing fast—by 33% and 22% a year, much faster than in North America.
  • Brand Power: Lululemon is still a popular name, with lots of people visiting stores and shopping online.
  • Leadership Change: A new CEO, especially one with a track record like Jane Nielsen, could help fix problems and boost sales again.
  • Activist Support: Having Elliott on board could push the company to make tough but needed changes.

Bears: Why Some Investors Are Worried

  • Falling Sales at Home: Sales in North America are down 5% in the latest quarter, and that’s a big concern because it’s the company’s biggest market.
  • Lost Focus: Lululemon tried new things like buying a fitness mirror company and launching shoes and skincare, but these haven’t paid off.
  • Brand Confusion: Recent changes in style and marketing, like loud logos and Disney partnerships, may not appeal to loyal customers.
  • Rising Competition: Other brands like Alo and Vuori are gaining popularity, especially with younger shoppers.
  • Operational Issues: Problems with marketing, supply chain, and costs have squeezed profits and hurt the company’s momentum.
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Lessons From History

This isn’t the first time a big brand has hit a rough patch. Jane Nielsen, the CEO candidate, helped turn around Coach and Ralph Lauren when they were struggling. At Coach, she helped the company return to growth after years of falling sales by closing weak stores and fixing inventory issues. At Ralph Lauren, her team made changes that led to a 20% jump in profits by targeting younger shoppers and improving their website. (source)

What’s Next?

Lululemon’s current CEO is stepping down in early 2026. Elliott wants to see Jane Nielsen, or someone with a similar skill set, take the top job. Meanwhile, the company’s founder, Chip Wilson, is pushing for his own picks for the board of directors, which could lead to more changes ahead.

This situation is similar to what happened at Starbucks, where Elliott also pushed for new leadership to help the company recover from challenges. With strong voices on all sides, the next few months will be important for Lululemon’s future—and for anyone investing in retail or athletic brands.

Investor Takeaway

  • Watch for leadership changes: A new CEO could spark a turnaround, but it might take time for results to show up in the stock price.
  • Keep an eye on North America sales: Recovery in this key market will be a big signal for future growth.
  • Monitor competition: Rising brands like Alo and Vuori could keep pressure on Lululemon’s market share.
  • Diversify your portfolio: Don’t put all your eggs in one basket—owning a mix of sectors and regions can help manage risk.
  • Look for company updates: Pay attention to quarterly earnings, new product launches, and board decisions in 2024 and 2025.

For the full original report, see CNBC

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