• Settlement talks between Lululemon and founder Chip Wilson collapsed last week, according to people familiar with the matter, ending hopes of avoiding a contested proxy fight.
  • The company said Wilson made “escalating demands” that were a “significant departure” from earlier discussions, forcing the board to reject his terms.
  • Wilson now plans to push ahead with his campaign to seat three nominees on Lululemon’s board, intensifying governance uncertainty.

Talks Break Down

Lululemon Athletica Inc.’s efforts to resolve a bitter dispute with founder Chip Wilson have hit a snag. The Wall Street Journal reported that settlement negotiations collapsed as recently as last week, with the company alleging Wilson made “escalating demands” that went far beyond what was previously discussed. Lululemon declined to comment further, but a company spokesperson said in a statement that Wilson’s proposals would have “harmed employees and shareholders.” Wilson did not respond to requests for comment.

The breakdown ends any near-term hope of avoiding a proxy fight, where Wilson is seeking to install three of his nominees on the board. Without a deal, the two sides are now headed for a contested ballot at the company’s upcoming annual meeting, likely in June.

Wilson, who founded Lululemon in 1998 and resigned from the board in 2015, has been vocal in his criticism of management, accusing them of losing the brand’s “cool” factor. He has said the board is “killing his brand” and has lost its soul. The company, meanwhile, has warned that electing Wilson’s nominees would endorse what it calls “misguided perspectives.”

A Brand Under Pressure

The showdown comes at a critical time for Lululemon. The company’s shares have fallen more than 50% in 2025, erasing over $25 billion in market value, as U.S. sales declined 2% in the most recent quarter. Higher markdowns, tariffs, and SG&A expenses have squeezed profit margins, and the broader athleisure sector has cooled. International revenue, however, surged 33% in constant currency, offering a bright spot.

Lululemon is also in the midst of a CEO succession process, announced in December 2025, after former chief Sun Choe departed. The leadership void and ongoing founder dispute have created significant governance risk, analysts say.

What’s Next

With talks collapsed, Wilson is expected to intensify his public campaign. He has already taken to social media and interviews to criticize management’s strategy, arguing that Lululemon has lost its identity. The company is preparing to defend its slate of directors and urging shareholders to reject Wilson’s nominees.

Some analysts view the proxy fight as a distraction that could harm employee morale and customer loyalty. “This is a governance nightmare at a time when the company needs focus,” one analyst said. Others note that Wilson’s $2 billion stake gives him significant leverage, even if his demands are seen as aggressive.

For now, Lululemon’s board remains united in opposition to Wilson, according to people familiar with the matter. The company is expected to file its proxy materials in the coming weeks, setting the stage for a high-stakes vote.

Correction: An earlier version of this article incorrectly stated that Wilson resigned from the board in 2016. He resigned in 2015.