Battered Lululemon Takes A Transitional Pose

Looks like the upheaval at Lululemon may be working its way toward some of that yogi- serenity, with big-bucks founder Chip Wilson agreeing to sell half of his shares to Advent International, a private equity firm.

The transaction, worth some $845 million and about 14% of the company’s shares, provides Advent with two seats on the board. And it further distances Wilson from a brand that is still struggling to recover-- first from a product flaw that left plenty of women in see-through yoga britches, and the subsequent remarks from Wilson that blamed it on women’s too-large thighs.

Wall Street responded to the latest news in the As-the-Yoga-Pants-Turn saga by sending the stock higher, and the move received the full blessing of the Vancouver, B.C.-based company’s board. But not everyone is impressed.

“Chip Wilson’s sale of stock to Advent appears promising, but we’re staying on the sidelines,” writes Sam Poser, an analyst who follows the stock for Sterne Agee. While he views Wilson’s sale to a group that knows the company well as good news, “the bad news is Chip Wilson is still on the board.”

While the overall market for women’s athletic apparel is still growing, he believes Lululemon has already has already lost significant ground, with once-loyal Lululemonites defecting to such competitors as “Athleta, Under Armour, Nike, Lorna Jane and others. It is very difficult to regain customers once they have left the fold.”

Poser also doubts its current management, including Laurent Potdevin, the former Toms Shoes executive tapped as CEO back in December. The brand has been “significantly damaged as a result of all of the events in the past 18 months. We believe the company will be able to fix the product problems. However, after numerous industry checks, we do not believe that Laurent Potdevin is the right person to fix the problems ‘under the hood’ and return the company to its prior prominence.”

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