Lululemon Athletica Inc. is on a roll now that it is reinvesting in its stock.
The ath-leisure company said Thursday that it is repurchasing 1 million shares of its own common stock from private equity giant Advent International for roughly $163 million.
“We appreciate Advent’s ongoing partnership and continued guidance over the years as the company has grown considerably,” said Calvin McDonald, chief executive officer of Lululemon. “Lululemon is stronger today because of our work together and we are pleased to complete this transaction in a strong financial position.”
Back in 2014, Lululemon founder Dennis “Chip” Wilson sold half of his stake in the women’s yoga pants company to Advent, a private equity firm, for $845 million.
That deal, which was backed by Lululemon’s board, gave Advent two seats on the retailer’s board and 20.1 million shares, or about 14 percent of the company. It was also an attempt to resolve disagreements among board members.
Those disagreements revolved around Wilson, who came under fire in 2013 for criticizing “some women’s bodies” after the company was forced to recall its see-through black Luon yoga pants. Wilson stepped down as chairman the same year, but remained director.
Advent, which first invested in Lululemon in 2005, has since sold 4 million shares of the company’s common stock. Prior to Thursday’s deal, Advent owned approximately 10 million shares of Lululemon’s stock.
“We remain actively involved with the company as investors and board members and look forward to its continued success under Calvin McDonald’s incredible leadership,” said David Mussafer, chairman and managing partner at Advent International and lead director of Lululemon’s board. “Helping the team execute on its long-term goals is precisely what we aim to achieve in any investment and this partial sale is consistent with our planned monetization of our interest in Lululemon.”
Lululemon will buy back shares with available cash on hand. The company has allocated $500 million for its share repurchase program and said it will still have $337 million left after the Advent deal.
Shares of the ath-leisure brand, which came to fame for its women’s yoga pants, shot up Thursday after its eighth consecutive quarterly earnings beat Wednesday night, with quarterly sales passing the $1 billion mark a year ahead of its 2020 goal. The stock closed up 14.1 percent to $167.54 — an 87.9 percent increase year-over-year.
“We see a wonderful path forward for our product both in our core as well as our ability to continue to expand the categories that we’re offering our guests,” McDonald said on the conference call with analysts Wednesday.
Stuart Haselden, chief operating officer at Lululemon, added that men’s pants, such as the ABC pants and commuter pants, is one of the fastest-growing segments in men’s wear.
“It’s become an important way in which we acquire new guys to the brand,” Haselden said. “We really believe that Lululemon can be a dual-gender brand, and that our men’s business can ultimately be as big as our women’s.”