Lululemon Stock Surges. Activist Elliott Takes a Stake and Pushes for Change.

A sign is displayed on a Lululemon Athletica store in Pasadena, California. (Kevork Djansezian/Getty Images)

Key Points

• Activist investor Elliott Investment Management acquires a stake exceeding $1 billion in Lululemon Athletica.
• Elliott Investment Management is seeking to replace the CEO and has proposed a replacement for the role, says a report.
• Lululemon’s stock has declined 45% this year through Wednesday.

Activist investor Elliott Investment Management has taken a stake worth more than $1 billion in Lululemon Athletica , according to people familiar with the matter. Investors are cheering the news.

The activewear company’s stock jumped 5.3% to $218.98 after the open Thursday.

Elliott wants to help turn around the struggling retailer and has a CEO candidate in mind—former Ralph Lauren Chief Financial Officer Jane Nielsen, The Wall Street Journal first reported Wednesday.

There’s a vacancy in the role, too, after Lululemon said last week that CEO Calvin McDonald will be stepping down on Jan. 31. The shares had their best day in months Friday, surging 9.6% after the announcement.

Despite that gain, the stock is still having a bad year–down 45% in 2025 through Wednesday’s close. But the shares pointed 7.5% higher in premarket trading Thursday amid optimism that Elliott’s involvement can put an end to the retailer’s recent underperformance.

“With this development, we assess that the worst is behind for stock pressure on LULU,” wrote Adrienne Yih, an analyst at Barclays. “We believe investor sentiment will be neutralized as corrective measures take shape. We view this as an incremental positive to drive positive change at LULU.”

Lululemon didn’t immediately respond to a request for comment.

The stock has gained 27% over the past month as investors have bet that the comeback is just getting started with a new CEO on the way. The market might also have been betting that activist involvement was just a matter of time.

Founder Chip Wilson, who stepped down from the board over a decade ago but still owns about 9% of the stock, said in October he was considering an activist campaign against the company to potentially replace board members. He most recently critiqued the company’s transition announcement, calling it a failure by the board to plan for the future.

Lululemon stock notched new highs as the Covid-19 pandemic bolstered demand for “athleisure” apparel. But the shares peaked in December 2023, and have since relinquished their earlier gains.

In many ways Lululemon fell victim to its own success. Its strong performance during the pandemic created a high bar for future comparisons. New competitors began to siphon off market share, and fashion trends underwent a gradual shift to favor denim and workwear. As a result, sales growth slowed.

Lululemon also struggled to hit the mark on its product assortment, failing to innovate quickly enough or have the right sizes and colors in stock.

Elliott may be betting that Nielsen’s experience in company turnarounds could cement a sustainable recovery for the brand. Her past roles have showed her to be one of the “most well-respected and capable executives in the industry,” wrote Tom Nikic, an analyst at Needham.

Nikic adds that Nielsen was “instrumental” in Ralph Lauren’s turnaround efforts while she worked there from 2016 to 2025. She set the stage for a “similarly impressive turnaround” of the Coach brand when she served as CFO from 2011 to 2016. Both of those stocks have been on a tear over the past three years as company reboot efforts have taken hold.

To be sure, the problems at Ralph Lauren and Coach were different to what Lululemon is facing. Both Ralph Lauren and Coach suffered from aggressive pushes to lower-price distribution channels, such as off-price retailers and outlets, that diluted the brand. Lululemon’s issues stem from product-related missteps.

“Her turnaround experience isn’t perfectly aligned with LULU’s current ills, but on the bright side, we believe that Coach and RL had much deeper-rooted issues than what LULU is currently facing,” Nikic wrote.

Jefferies analyst Randal Konik has a more downbeat view. Fixing Lululemon will be a “multi-year lift” that won’t be easy, he wrote, as he outlined a series of suggestions he hopes Elliott will push the company to focus on. That includes refreshing the company’s leadership team, refocusing on Lululemon’s core yoga-inspired identity, reducing markdowns, and setting realistic growth targets.

Write to Callum Keown at callum.keown@dowjones.com