Lululemon Stock Sours As VC, COO Jump Ship

Don’t look now, but Lululemon (LULU) is in freefall, down 8% on hefty volume as I write this. The slide comes a day after the company announced its chief operating officer has left the company, and within days (and a week) after the largest venture-capitalists have bailed by selling most or all of its shares either through direct sales or a transfer of shares to its partners. It’s unclear whether those partners, in turn, are selling their shares.

Here’s the best part: According to filings, CEO Bob Meers can exercise his options once the VCs have earned a certain return by selling their shares. They did, though it’s unclear whether he is or will. With an exercise price of 60 cents per share, Meers stands to make more than the company earned in its IPO.

You read that right: Rather than having a performance goal for his options based on company metrics, as is the case with his bonus, the only performance target is that the guys who hired him make a certain return. It’s the new world order: “We (VCs) get out, you (management) get out, too,” shareholders, be damned. Quite the deal.

Of course, this is the same Bob Meers who appears to have fudged a bit on his resume, as we’ve previously reported. No wonder nobody at the company wanted to address the issue.

The beat goes on….and stay tuned for more.

Comments

[ballsschweaty]

Herb, Whole Foods is 400% higher than when you first started bashing that company.

Your track record is abysmal. That's why you're a journalist.

LOL!!!

[GaryD]

Schwetty is a liar. Take a look at the Whole Foods stock price. Nothing but down for over two years. Usually blog liars are more creative than this. Try to come up with one that isn't so easy to debunk next time.

The Lululemon story makes me laugh. The vast majority of American women would look really, really bad wearing yoga clothes. The clothes might sell on the west coast of Canada where people actually exercise, but there is no way they are going to get any traction in the US where obesity is the norm. The insiders timed it perfectly.

[Allen Jones]

Nice job on this one Herb.

[Bohman]

Actually Gary, once the fourth quarter numbers come you, I am sure you will be amazed. You obviously know very little of the store if you think it is Yoga clothes. THey are Yoga inspired, and its the big rage right now! I know for a fact that two or three of there stores made 4 times the profit this xmas and have not been able to keep product in for very long. And women look amazing in their outfits! Even guys have some cool clothes. No, this one is here to stay, and they are targetting the wealthier women , so a slowdown in spending will not affect them as much. Meers hasn't sold, as he knows this stock will start to move once their numbers keep getting bigger. THink about it! 20 more stores, 4 times the sales....

I think Greenberg has good intentions and points, however, I think he doesnt realize the potential of this stock. Canadian consumers are already huge into buying this stuff. And the Asian markets will love it, as thats the reason the name was picked as Lululemon, with all the L's in the name, it is recognized as a North American product and NA products do well in Asia. Also, they havent even touched Europe yet, so this one has a lot of growth potential!!

Good luck!! Cant wait till April's 4th quarter results!!