New York/Vancouver — Activist investment firm Elliott Investment Management has built a stake exceeding $1 billion in Lululemon Athletica and is advocating for leadership change by putting forward a potential CEO candidate, according to a person familiar with the matter. The news sent Lululemon's stock up 6% in early trading Thursday, reflecting investor anticipation of strategic shifts at the athleisure giant.

The move follows last week's announcement that CEO Calvin McDonald will step down on January 31, amid what founder Chip Wilson described as a performance "nosedive." Elliott is reportedly working with Jane Nielsen, the former Chief Financial Officer and Chief Operating Officer of Ralph Lauren, as a potential successor. Nielsen's background includes senior roles at Coach and PepsiCo, bringing extensive retail and consumer goods experience to the table.

A Pivotal Moment in a Crowded Market

Lululemon faces mounting pressure in an increasingly competitive athleisure landscape, with rivals like Vuori and Alo Yoga gaining traction. Elliott's significant stake and proactive push for leadership change signal a decisive strategic intervention aimed at reversing the company's recent slump. The activist firm has been actively shaping corporate strategies this year, with major positions in companies like Workday and PepsiCo, underscoring its influence.

The board has stated it is working with a leading executive search firm to find a new CEO, making the coming weeks critical. Whether the board embraces Elliott's candidate or selects its own, the activist's presence ensures that the succession process will be closely scrutinized and likely accelerate plans for a operational or strategic refresh.

High Stakes for Brand Revival

Elliott's involvement raises the high stakes for Lululemon's next chapter. The company must navigate a delicate balance: preserving its premium brand identity and loyal customer base while implementing necessary changes to reignite growth and fend off competitors. Successfully executing a leadership and strategic turnaround in this dynamic retail ecosystem will be the defining challenge for whomever assumes the CEO role.

For investors, Elliott's entry represents a catalyst for potential value creation, but also introduces a period of uncertainty as the battle for the company's strategic direction unfolds.