Only three years ago the founder of a big Canadian success story had considered an M&A deal that would have put it in the global spotlight but now the tables have sadly turned
Lululemon Athletica Inc. founder Chip Wilson, who split from the company over strategy disagreements, said he once considered acquiring Under Armour Inc., a deal that would have combined two of the biggest brands in athletic apparel.
“Three years ago, when I was chairman and Lululemon was worth twice as much as Under Armour, I personally was thinking of buying Under Armour,” Wilson said in a televised interview with Stephanie Ruhle and David Westin on “Bloomberg ‹GO›.”
The landscape of the industry has shifted since then. Wilson, who founded Lululemon in 1998, left a day-to-day management role in 2012 and later stepped down as chairman. Lululemon’s stock fell into a slump, hurt by slowing sales and mounting competition. Under Armour, meanwhile, has surged.
That means the tables are reversed when it comes to a potential deal. Under Armour and Nike Inc. have both been cited as possible bidders for Lululemon in recent weeks.
“I would think now that Under Armour is worth three times the amount of Lululemon, somebody’s got to be thinking something,” Wilson said.
Lululemon shares rose as much as 3.6 percent to $47.77 after Wilson made the remarks. The stock was down 17 percent this year through the end of last week.
Diane Pelkey, a spokeswoman for Baltimore-based Under Armour, declined to comment.
Lululemon filed for an offering in June that allowed Wilson and his wife to exit their roughly 14 percent stake in the company. The move followed the settlement of a dispute between Lululemon and its outspoken founder, who had said he was unhappy with the direction the retailer took after he left as chairman. As part of that deal, Wilson agreed not to pursue a buyout of the company for at least a year.
Under Armour’s market valuation currently stands at almost $18 billion. Lululemon’s is about $6.6 billion.
Lululemon, based in Vancouver, posted disappointing third- quarter sales and profit last week. The company is trying to defend its yogawear turf from Under Armour and Nike, which have both pushed deeper into the category in recent years. Lululemon also is contending with a pileup in inventory, which may lead to more aggressive discounting.
Bloomberg News
Nick Turner and Matt Townsend
With assistance from Stephanie Ruhle and David Westin
“Three years ago, when I was chairman and Lululemon was worth twice as much as Under Armour, I personally was thinking of buying Under Armour,” Wilson said in a televised interview with Stephanie Ruhle and David Westin on “Bloomberg ‹GO›.”
The landscape of the industry has shifted since then. Wilson, who founded Lululemon in 1998, left a day-to-day management role in 2012 and later stepped down as chairman. Lululemon’s stock fell into a slump, hurt by slowing sales and mounting competition. Under Armour, meanwhile, has surged.
That means the tables are reversed when it comes to a potential deal. Under Armour and Nike Inc. have both been cited as possible bidders for Lululemon in recent weeks.
“I would think now that Under Armour is worth three times the amount of Lululemon, somebody’s got to be thinking something,” Wilson said.
Lululemon shares rose as much as 3.6 percent to $47.77 after Wilson made the remarks. The stock was down 17 percent this year through the end of last week.
Diane Pelkey, a spokeswoman for Baltimore-based Under Armour, declined to comment.
Lululemon filed for an offering in June that allowed Wilson and his wife to exit their roughly 14 percent stake in the company. The move followed the settlement of a dispute between Lululemon and its outspoken founder, who had said he was unhappy with the direction the retailer took after he left as chairman. As part of that deal, Wilson agreed not to pursue a buyout of the company for at least a year.
Under Armour’s market valuation currently stands at almost $18 billion. Lululemon’s is about $6.6 billion.
Lululemon, based in Vancouver, posted disappointing third- quarter sales and profit last week. The company is trying to defend its yogawear turf from Under Armour and Nike, which have both pushed deeper into the category in recent years. Lululemon also is contending with a pileup in inventory, which may lead to more aggressive discounting.
Bloomberg News
Nick Turner and Matt Townsend
With assistance from Stephanie Ruhle and David Westin
