Chip Wilson may have lost his first battle with the board of Lululemon, the company he founded, but it looks like the war has just begun.

The Wall Street Journal reported Sunday that Wilson is in talks with investment bank Goldman Sachs on how to take greater control of the company, which he sees as now being headed in the wrong direction.

Wilson could strike a deal with a private equity firm to buy out Lululemon (he currently owns 27 per cent of the company’s shares) or launch a proxy fight to gain control of more seats on the company board, or he could just sell his stake in the company and be done with it, the Journal reported.

No decisions have been made on how to proceed, a “source familiar with the situation” told the Globe and Mail.

Wilson, who stepped down as CEO of Lululemon in 2005 and resigned as chairman of the board last year, launched a well-publicized challenge to the company’s management two weeks ago, announcing he would vote against two directors, including the chairman who replaced him, Michael Casey. Shareholders re-elected the two directors all the same.

Wilson is reportedly unhappy with the company’s focus on turning short-term profits and wants to see the company look at creating value in the long term, through product innovation.

The Journal notes that Lululemon fell behind the fashion curve in recent seasons. Its focus on fixing the now-famous problems with sheerness and pilling of yoga pants distracted the company from product development.

"While it was focused on fixing the quality issues, it missed a shift in consumer demand toward bright colors, patterns and new trims from solid staples," the Journal reports. "The shift caused the company to lose out on sales and left it with piles of unsold inventory."

Adding to the company’s quality problems was Wilson’s controversial comment last year that “some women’s bodies” are not suited to Lululemon clothing, a remark that was widely seen as having pushed Wilson to resign as chairman.

Lululemon shares jumped on the report of Wilson's talks with Goldman Sachs, and were up 3 per cent on the day as of 11:00 a.m. ET. Lululemon's stock price has been under pressure for the past year, losing about half its value since the peak last June. That slide has cost Wilson an estimated $1.7 billion in net worth.

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  • The Name Explained

    What’s behind Lululemon’s name? Company founder Chip Wilson has <a href="http://business.financialpost.com/2013/12/10/lululemon-athletica-chip-wilson-controversy/" target="_blank">offered an odd explanation</a>. “The reason the Japanese liked (my former skateboard brand, ‘Homeless’) was because it had an L in it and a Japanese marketing firm wouldn’t come up with a brand name with an L in it," he explained to National Post Business Magazine. "L is not in their vocabulary. It’s a tough pronunciation for them. So I thought, next time I have a company, I’ll make a name with three Ls and see if I can get three times the money. It’s kind of exotic for them. I was playing with Ls and I came up with Lululemon. It’s funny to watch them try to say it,” he said. However, The Globe and Mail notes <a href="http://www.theglobeandmail.com/report-on-business/five-infamous-gaffes-from-lululemons-past/article15847989/" target="_blank">the company’s site says the name was the result of a survey</a>.

  • Child Labour Comments

    Back in 2005, Wilson’s <a href="http://thetyee.ca/News/2005/02/17/LuluCritics/" target="_blank">comments about child labour “went over like a lead balloon”</a> at a Vancouver conference, according to The Tyee. The site reported: “Wilson told the delegates third-world children should be allowed to work in factories because it provides them with much-needed wages. They also say he argued that even in Canada there is a place for 12- and 13-year-old street youths to find work in local factories as an alternative to collecting handouts.”

  • Ayn Rand Totes

    Lululemon’s <a href="http://www.huffingtonpost.ca/2011/11/16/lululemon-ayn-rand-john-galt-tote-bags_n_1097615.html" target="_blank">‘Who Is John Galt?’ tote bags</a> were a nod to Ayn Rand’s <em>Atlas Shrugged</em>, which promotes individualism and capitalism over collectivism. But some customers didn’t appreciate the political message. The company <a href="http://lululemon.com/community/blog/who-is-john-galt/" target="_blank">defended the product on its blog</a>: “Chip Wilson, first read this book when he was eighteen years old working away from home. Only later, looking back, did he realize the impact the book’s ideology had on his quest to elevate the world from mediocrity to greatness (it is not coincidental that this is Lululemon’s company vision).”

  • Seaweed Slip

    In 2007, Lululemon came under scrutiny for its VitaSea clothing, which the company said was made with seaweed that provided health benefits. A New York Times article challenged the company’s claim and said it found the material showed “<a href="http://www.nytimes.com/2007/11/14/business/14seaweed.html?pagewanted=all" target="_blank">no significant difference in mineral levels between the VitaSea fabric and cotton T-shirts</a>.” Independent testing “confirmed the presence of vitamins, minerals, and amino acids in the VitaSea fabric,” a company statement said, but the retailer <a href="http://www.cbc.ca/news/business/lululemon-to-remove-claims-from-seaweed-clothing-line-1.655660" target="_blank">agreed to remove references to therapeutic benefits of the product</a>.

  • Sheer Insanity

    Lululemon’s too-sheer yoga pants were perhaps the company’s most infamous headache. The company<a href="http://www.businessinsider.com/lululemon-see-through-yoga-pants-2013-3" target="_blank"> pulled its defective Luon pants from shelves in March 2013</a>, following customer complaints that the pants were see-through. Lululemon <a href="http://www.businessinsider.com/lululemon-restocks-black-luon-yoga-pants-2013-6" target="_blank">said it expected to lose as much as $67 million from the blunder</a>. To make matters worse for the retailer, it was<a href="http://www.cbc.ca/news/business/lululemon-hit-with-3rd-class-action-lawsuit-from-investors-1.1385376" target="_blank"> hit with three class-action lawsuits related to the recall</a>.

  • Bend Over?!

    Adding insult to injury? Some customers seeking refunds said Lululemon salespeople asked them to demonstrate the sheerness of their pants by bending over. “I went into my local store to return my Astro pants and Invert crops, both purchased this month.<a href="http://jezebel.com/5992004/lululemon-is-asking-customers-to-bend-over-to-prove-their-yoga-pants-are-really-that-sheer" target="_blank"> I was asked to BEND OVER in order to determine sheerness</a>. The sales associate then perused my butt in the dim lighting of the change room and deemed them "not sheer." I felt degraded that this is how the recall is being handled,” according to one customer. The company responded, <a href="http://www.huffingtonpost.ca/2013/03/26/lululemon-recall-customer_n_2955731.html?utm_hp_ref=lululemon" target="_blank">saying it would offer returns</a> “no questions asked.”

  • Pilling Pants

    Even more quality complaints plagued the company following the sheer pants recall. Shoppers <a href="http://www.huffingtonpost.ca/2013/11/01/lululemon-pilling-pants_n_4194168.html" target="_blank">weren’t impressed with yoga pants pilling and seams coming apart</a>. And yes, some still complained that the pants were still too sheer.

  • Chip Wilson On Women’s Bodies

    Wilson put his foot in his mouth when he <a href="http://www.huffingtonpost.ca/2013/11/07/chip-wilson-lululemon-pants_n_4236637.html?utm_hp_ref=lululemon" target="_blank">told Bloomberg TV that "some women’s bodies just actually don’t work" with their products</a>, which have been known to pill or look too sheer. “It’s really about the rubbing through the thighs, how much pressure is there over a period of time and how much they use it,” he said.

  • Again With The Thighs

    Not long after Wilson’s comment about thighs rubbing together sparked outrage, a Bethesda, Md. shop raised eyebrows when it featured a <a href="http://www.huffingtonpost.ca/2013/12/03/lululemon-rubbing-thighs-window_n_4379280.html?utm_hp_ref=lululemon" target="_blank">sign in its window that read: “Cups of chai, apple pies, rubbing thighs?”</a> The brand apologized for the controversial display, saying “We celebrate that thighs rub together -- ours do too.”

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