Buyer Beware? Lululemon Leaps on Founders Reduced Stake

Shares of Lululemon Athletica (LULU) have popped in after-hours trading on reports that founder Chip Wilson will sell his stake in the company. Reuters has the details:

REUTERS

Chip Wilson, the founder of Lululemon Athletica Inc, has agreed not to wage a proxy contest on the yoga apparel maker, in return for two additional director positions and number of other governance changes, the company said on Thursday.

As part of the agreement, Wilson will sell half of his 27 percent stake to private equity firm Advent International for $845 million. Advent will add two of its senior managers, David Mussafer and Steve Collins – to Lululemon’s board, expanding it to 12 members. Mussafer will take the role as co-chairman alongside existing chairman Michael Casey.

Shares of Lululemon have gained 6.8% to $41.69 at 5:34 p.m. in after-hours trading after dropping 2.4% during regular market hours today.

UPDATE: Belus Capital’s Brian Sozzi interprets Lululemon’s press release:

While the market cheers the news of Chip Wilson selling a part of his stake, theoretically relieving some of the headline risk from the prolonged public board squabbles, buyer beware.  Here are two things we decoded from this news bomb:

1.      Lululemon is likely to issue a disappointing second quarter and outlook (again) when it announces earnings on September 11.  Not only have we been unimpressed with the lack of newness in the assortment, but Under Armour's (UA) growing dominance in women (and increased floor space at Dick's Sporting Goods (DKS) and Macy's (M)) as seen in the second quarter likely was siphoned right from the cash registers of Lululemon.

2.      Chip Wilson in not so many words suggested Lululemon, although having ample long-term growth opportunities, does NOT own the female athletic apparel market and does NOT deserve to be valued as such by the market.  Barriers to entry have come down, and the fact is rivals are doing a better job getting more versatile product to market quicker than Lululemon.

3 Sneaky Things Hurting Your Credit (That You Can Easily Fix)

Jupiterimages.com When it comes to understanding your credit, it can feel as complicated as trying to solve a Rubik's cube. Frustrated by this confusion, many consumers neglect their credit, which can have a devastating impact on their financial futures. A Consumer Action study recently revealed that 27 percent of Americans have never checked their credit report. That's alarming, because it's estimated that a large numbers of consumers have errors on their credit reports that could damage their credit. I found this out several years ago when I found an error -- a canceled account that was being reported as delinquent -- hurting my credit. In my research, I have identified three sneaky things that are hurting other people's credit, too. Surprisingly, they could be fixed in 15 minutes or less. First, you need to get your credit report, and you should go to AnnualCreditReport.com. From this site, you can request your free credit report once a year from the three major credit reporting agencies -- (Equifax (EFX), Experian (EXPGY) and TransUnion). You can also access your credit score there, but you'll have to pay a small fee. To get a free credit score, you can go to Credit.com or Creditkarma.com. Keep in mind that these two as well as a lot of other free sites offer a consumer education score, which isn't your actual FICO (FICO) score. This confused even me when I sought to find my real credit score. Your FICO score changes daily, so getting your credit scores from these free sites will give you a good gauge of approximately what your credit score is. 1. Wrong Information The wrong personal information on your credit report could hurt your credit. This could be things like your name, your home address, where you've worked in the past or even your Social Security number. How does a wrong address hurt your credit? Your information may be mixed up with someone else's, especially if you have a common name, or are a "Jr." or "Sr." Or it could indicate identity theft -- and that could really wreak havoc with your credit. By reviewing your credit report, you'll be able to quickly see if there's any information that needs to be updated or changed. 2. High Balances Compared to Limits Another sneaky thing that could hurt you is your credit card balances -- even those you pay in full. How can a credit card that you pay off hurt your credit? Issuers typically report your balances as of the statement closing date. But then those cards aren't due until about a month later. So in the meantime the balance on your reports may look high in comparison to your credit limits.

Generally you want the balance on each card to stay below 20 percent to 25 percent of your available credit. If you have a retail card with a small limit or a reward card that you use to pay for everything to earn lots of points, then this factor could come back to bite you. So you need to either pay your charges off before the statement closing date or ask for a higher credit limit. Of course, a higher credit limit should not be an invitation to overspend. You won't improve your credit scores if you get in over your head with debt. 3. Outstanding or Delinquent Bills The third sneaky thing that could hurt your credit score could be outstanding or delinquent bills. I canceled a gym membership when I moved, and it wasn't until I checked my credit report several years later that I found out the gym was marking me as being delinquent, which was hurting my credit. You'll want to check your credit report to make sure that you have no outstanding bills or any delinquent bills that you need to get addressed. For my delinquent gym membership, I contacted its home office and explained that I had moved and their closest location was more than hours away. After that short and painless phone conversation, it removed the delinquency, and my credit was repaired. Review your credit report and make sure you're not being marked for anything delinquent that could be damaging your credit. This could be old gym memberships like mine, credit cards or medical bills. "I've seen numerous situations where consumers were shocked to learn that medical bills they thought their insurance had taken care of were on their credit reports as collection accounts, " warns Gerri Detweiler, director of consumer education with Credit.com. "It doesn't matter if the amount is small. Any collection account can drop your credit score 25, 50, even 75 points or more."