Lululemon founder Chip Wilson has a lot to say about his days in charge of the athletic wear company that he took from a small shop in Vancouver to a stretchy worldwide phenomenon, including his regrets around taking Lululemon Athletica (Lululemon Stock Quote, Chart NASDAQ:LULU) public. What he doesn’t deny, however, is that some women’s bodies just don’t work for his yoga pants.
Out promoting his new book entitled Little Black Stretchy Pants and dubbed by Wilson “the unauthorized story” of Lululemon, the apparel entrepreneur and philanthropist says that although the company he founded 20 years ago was making money hand over fist at the time of its IPO in 2007, Wilson’s own lack of good judgment got him and Lululemon into trouble on a number of occasions, starting with the loss of control that came with going public.
“Like Nike or Under Armour or any great company that holds a vision, a culture, really, it can only be held by I think the founder or the founder’s family who understands what that is. And that can only be done when you hold A and B class shares,” says Wilson in conversation with BNN Bloomberg. “It allows the owner to control the board of directors or at least have enough votes that that part of the company can never leave but you have enough independent directors who can also direct the auditing and making sure there’s an independent voice for the rest of the shareholders.”
“I think what happened was that no one [in Vancouver] had ever seen a company that didn’t need money. Lululemon was making so much money that when I was looking for advice, I wasn’t looking for money. But when the deal got done —and this is what I’m trying to tell other entrepreneurs— I needed outside advisors to help me get advisors, and I needed to learn that, ‘Oh, because I don’t need money I have control over how the deal is made,’” says Wilson.
Lululemon share price has had a terrific run in 2018, having increased more than 115 per cent in value over the past 12 months. The stock has pulled back over the past couple of weeks but its prospects may in fact be much better, with consumer spending up in the United States and Lulu’s brand staying strong in the activewear and ‘athleisure’ space the company helped pioneer.
Things weren’t so rosy a few years ago when complaints over product quality were dogging the company and effectively triggered Wilson’s now-famous 2013 interview during which he was questioned about Lululemon’s problems with pants that looked almost see-through and fabric that too-quickly succumbed to pilling.
Wilson began by insisting that manufacturing issues were being addressed but then added, “There has always been pilling. The thing is that women will wear seat belts that don’t work or they’ll wear a purse that doesn’t work or, quite frankly, some women’s bodies just don’t work for it,” he said.
In hindsight, perhaps surprisingly, Wilson still supports the claim, even though he might’ve been better off not stating it publicly.
“You know, we had a COO who figured out that you could raise prices and lower the quality and then the quarterly numbers would look good, and the stock kept going up and the board of directors was enamored by that rather than the big disaster that was going to happen which was our quality control,” he said. “[But] the whole premise was done on quality.”
“I think Lululemon was built on authenticity and saying what actually is true and not hiding anything,” Wilson said. “What I said was true, and I regret it because it was a world that I didn’t know about at the time, and social media was coming in.”
Wilson philosophically chalks up his mistakes to a lack of business savvy. “I was just young and naive,” he says. “I’m a product/brand person, I’m passionate about the culture. You know, there’s the business of Lululemon and then there’s the business of finance and manipulation in the background.”