Elliott Management disclosed that it has built a stake of more than $1 billion in Lululemon Athletica Inc., making the hedge fund one of the retailer’s largest shareholders. The investment, valued at roughly 4% of the company’s market capitalization, signals Elliott’s intent to influence Lululemon’s strategic direction and operational execution.
The stake is accompanied by a proposal to appoint Jane Nielsen, former chief operating officer and chief financial officer of Ralph Lauren, as Lululemon’s next chief executive officer. Nielsen has expressed willingness to discuss the role with the board, and her track record of driving margin expansion and turnaround at Ralph Lauren and Coach gives Elliott confidence that she can address the retailer’s recent product‑execution challenges and competitive pressures.
Lululemon’s current CEO, Calvin McDonald, will step down on January 31 2026, a transition that has already prompted a search for a successor. McDonald’s tenure saw revenue triple and the company’s China market grow 46% in Q3 2025, but the retailer has faced slowing U.S. growth, a 5% decline in comparable sales, and a 290‑basis‑point drop in gross margin to 55.6% due to tariffs and higher markdowns.
In Q3 2025, Lululemon reported revenue of $2.6 billion, up 7% from the same quarter a year earlier, driven by a 46% increase in China Mainland net revenue. Diluted earnings per share rose to $2.59 from $2.87 in Q3 2024, a beat of $0.28 or 9.8% over consensus estimates of $2.21. The earnings beat was largely attributable to disciplined cost management and a favorable product mix that offset the margin compression caused by higher import duties and markdowns.
Management raised its full‑year 2025 revenue guidance to $10.96 billion–$11.05 billion, up from the prior $10.80 billion–$10.90 billion range, and lifted diluted EPS guidance to $12.92–$13.02, slightly above the previous $12.80–$12.90 range. The guidance increase reflects confidence in sustained international growth and the expectation that operational improvements will mitigate the margin squeeze.
Investors have responded positively to the activist stake and the proposed CEO candidate, with trading volume spiking as market participants reassess Lululemon’s strategic trajectory. The combination of Elliott’s influence and Nielsen’s turnaround experience is viewed as a catalyst for addressing the retailer’s product‑execution issues and competitive headwinds.
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