Lululemon Athletica’s (LULU) founder Dennis “Chip” Wilson has lost that Zen feeling since being ousted as the head of the yoga retailer–and might be taking steps to retake control.
Bloomberg News Over the weekend, the Wall Street Journal reported that Wilson was working with Goldman Sachs (GS) as he tries to figure out what’s the best way to either retake control of Lululemon or sell his stake in the company.
Sterne Agee’s Sam Poser and Ben Shamsian worries that Wilson’s history of making insulting comments could make his return difficult:
If the reports are accurate, a strategic acquisition by a large apparel company is unlikely. Given the domestic and international growth objectives and fixed cost structure, the free cash flow is not large enough to allow for significant balance sheet leverage by private equity. Based on his comments from last November which we contend damaged the LULU brand, we believe potential partners may be warded off by Mr. Wilson’s volatility. We do not believe that Mr. Wilson will detach himself from LULU, which leaves us on the sidelines.
Shares of Lululemon have gained 3.5% to $41.64 at 11:31 today.
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