06/23/2014 11:39 EDT | Updated 06/23/2014 11:59 EDT

Chip Wilson Plots With Goldman Sachs To Do, Well, Something About Lululemon

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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