Lululemon not appointing Jane Nielsen a disappointment, says Needham

Needham keeps a Hold rating on Lululemon (LULU) after the company confirmed Heidi O’Neill as its next CEO, effective September 8. Activist Elliott Management took a stake in Lululemon and reportedly had been pushing for Jane Nielsen as CEO, the analyst tells investors in a research note. Needham says Nielsen is very highly regard by the Street, so any selection other than her will drive a share selloff. The firm, however, views O’Neill as an “intriguing choice.” Needham thinks O’Neill was a potential candidate for Nike’s CEO role and highlights her direct experience for the leader in the athletic sector. It believes investors might view the appointment ” with a healthy dose of skepticism” given that O’Neill’s most senior roles at Nike coincided with the “ill-fated” Donohoe era. Shares of Lululemon are down 12%, or $19.13, to $144.32 in morning trading.