The stock of Canadian athletic apparel maker Lululemon Athletica (LULU) is down 11% as investors give a thumbs down to the company’s new CEO, Heidi O’Neill.
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While the Vancouver-based company is doing its best to trumpet the appointment of O’Neill, a former Nike (NKE) executive, investors don’t seem to be buying it as LULU stock sells off sharply on April 23. The new CEO was announced after markets closed on April 22.
The appointment of O’Neill, who has also worked at Levi Strauss & Co. (LEVI) and served on the board of directors at music streaming giant Spotify Technology (SPOT), is the latest misstep for Lululemon, which has struggled with a number of poorly received product launches in recent years.
The Chip Wilson Factor
O’Neill will have her work cut out for her when she assumes the helm of Lululemon on Sept. 8 of this year. The company’s stock is down nearly 60% over the last five years amid slowing sales, disappointing earnings, and numerous product misfires that have disappointed consumers.
At the same time, Lululemon’s founder Chip Wilson continues to publicly criticize the company and push for leadership changes, both at the executive level and on the board of directors. Wilson, who remains Lululemon’s largest individual shareholder, has publicly sparred with the company’s board in recent years.
Is LULU Stock a Buy?
Lululemon Athletica’s stock has a consensus Hold rating among 20 Wall Street analysts. That rating is based on one Buy and 19 Hold recommendations issued in the last three months. The average LULU price target of $178.38 implies 23% upside from current levels.
