Activist Elliott builds Lululemon stake, proposes CEO candidate

Activist investor Elliott Investment Management has built a stake of more than $1 billion Lululemon Athletica He brings a potential CEO candidate to the table, a person familiar with the matter told CNBC.

Lululemon stock rose 6% in early trading Thursday.

Last week, Lululemon announced that CEO Calvin McDonald would step down effective January 31, following a year-long decline in Lululemon’s performance.

Elliot was working with the former Ralph Lauren CFO and Chief Operating Officer Gene Nielsen is a potential candidate, according to the person who spoke on the condition of anonymity regarding confidential matters.

In a press release announcing McDonald’s departure, the company said its board of directors is working with a “leading executive search firm” to find its next CEO. The leadership change came as Lululemon founder Chip Wilson called on the company to make a change, saying earlier this year that the company’s performance was “on the decline.”

The athletic apparel company faces an increasingly crowded landscape, with entrants to the athleisure world like Vuori and Alo Yoga.

Nielsen worked at Ralph Lauren from 2016 until April. Before that, she held roles at Coach and PepsiCo.

Elliott has taken a stake in a host of other companies as well this year, including a more than $2 billion stake in Work day and a $4 billion stake in PepsiCo. The Wall Street Journal had previously reported on Elliott’s stake in Lululemon.