WHEN: Today, Wednesday, June 15th
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC interview with Lululemon Founder Chip Wilson on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today, Wednesday, June 15th. Following is a link to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000526071.
All references must be sourced to CNBC.
JIM CRAMER: SHARES OF LULULEMON OUT PERFORMING RIVALS NIKE AND UNDER ARMOUR THIS YEAR AND OVER THE LAST COUPLE OF YEARS. THAT HASN'T STOPPED THE COMPANY'S FOUNDER AND LARGEST SHAREHOLDER FROM GOING AFTER MANAGEMENT AND THE BOARD. JOINING US FROM OUR ICONIC CONFERENCE IN PARTNERSHIP WITH INC. MAGAZINE IN DENVER, LULULEMON FOUNDER CHIP WILSON. MR. WILSON, SINCE YOU WERE ON OUR NETWORK LAST, AND HAD SOME VERY CRITICAL COMMENTS, I'M LOOKING AT THE TRANSCRIPT, WE HAD A PRETTY AMAZING QUARTER FROM LULULEMON. I HAVE HERE IN MY HAND FIVE PIECES OF RESEARCH THAT ALL SAY IT WAS A REMARKABLE QUARTER, MAYBE BEST IN SHOW FOR RETAIL. IS IT TIME TO TEMPER THE CRITICISM?
CHIP WILSON: WELL, THE BAR IS SET REALLY LOW WHEN IT IS AROUND LULULEMON'S DOWNWARD REVISED EARNINGS AND THEY STILL DIDN'T HIT MARGIN OR EPS. STILL DECLINING. AND SO, I THINK IF YOU LOOK AT IT OVER A THREE, FOUR YEAR PERIOD, WHICH IS REALLY WHAT YOU HAVE TO LOOK AT TO DETERMINE WHETHER THE CEO AND THE BOARD IS ACTUALLY PRODUCING, THE ANSWER IS NO, THEY'RE NOT.
CRAMER: YES, BUT TOTAL SAME STORE SALES WERE 8%. SIR, I SPENT A LOT OF TIME COVERING RETAIL. AND NOT TO JUST DIRECTLY CONTRADICT YOU, BUT YOU HAD A REALLY – THIS WAS A REMARKABLE, HIGH SINGLE DIGIT COMPS STORE NUMBER FOR THIS QUARTER AND ALMOST NO ONE ELSE HIT THAT. I HAVE TO GO TO ULTA SALON TO BEAT THAT. AND THE MARGINS ARE IMPROVING. SO, ISN'T IT TIME TO JUST SAY, YOU KNOW WHAT? LET'S JUST SEE. MAYBE THESE ARE DOING BETTER AND RATHER THAN BLAME THE BOARD, WHICH I THINK HAS ACTUALLY GOT A LOT OF GOOD PEOPLE ON IT, WHY NOT JUST SAY, YOU KNOW WHAT? THEY'RE GOING IN THE RIGHT DIRECTION.
WILSON: BECAUSE THEY'RE NOT PUTTING ANY MORE MONEY ON THE BOTTOM LINE. THEY'VE INCREASED $500, $600 MILLION IN REVENUE OVER THE LAST THREE YEARS AND NOTHING HAS GONE TO THE BOTTOM LINE.
CRAMER: WELL, THEY BOUGHT BACK A LOT OF STOCK AND LET'S GO OVER THE BOARD. YOU HAVE A COUPLE OF PEOPLE WHO I THINK ARE PRETTY CLOSE TO YOU ON THE BOARD. AGAIN, I'M DEFENSIVE ABOUT THIS ONLY JUST BECAUSE THIS IS ONE OF THE FEW THAT IT WAS A BRIGHT SPOT. I'M LOOKING AT A MACY'S AND I'M LOOKING AT A KOHL'S. I'M LOOKING, FRANKLY, AT AN UNDER ARMOUR, I'M LOOKING AT BED BATH. I'M LOOKING AT A LOT OF DIFFERENT – BEST BUY, AND YOU KNOW, PVH, VF CORP. NO ONE HAD THESE NUMBERS AND THEY BOUGHT BACK A LOT OF STOCK, WHICH IN RETROSPECT, THEY BOUGHT BACK AT THE RIGHT LEVEL. SO, AGAIN, I'M IMPLORING YOU TO LOOK AT YOUR COMMENTS ON JUNE 1 BEFORE THE QUARTER AND LOOK AT IT NOW AND I'M NOT SAYING THROW THEM A BONE, BUT YOU HAVE TO RECOGNIZE THAT THIS WAS THE BEST QUARTER OF APPAREL.
WILSON: YEAH, BUT YOU'RE LOOKING AT IT WITHIN A VERY NARROW CONTEXT OF COMPETITION. AND ACTUALLY, I HAD BEEN COMPARING THE LULULEMON TO THE COMPETITION OF WHICH NIKE AND UNDER ARMOUR, WHICH IS REALLY THEY HAVE DONE APPALING. BUT IF YOU LOOK AT THE BIG PICTURE, LULULEMON INVENTED THIS MARKET AND WE'RE IN THE MIDDLE OF THE BIGGEST CHANGE IN THE WAY PEOPLE ARE DRESSING IN THE HISTORY OF THE WORLD AND LULULEMON HAS DONE, WHAT, MAYBE 60, 70% LESS THAN THE COMPETITION AND 15, 16% LESS THAN THE S&P.
CARL QUINTANILLA: IT IS FUNNY, I MEAN NORMALLY, WE HAVE FOUNDERS, CEOS AND WE TRY TO HIT THEM HARD. HERE, WE'RE TRYING TO TELL YOU THAT MAYBE YOU'RE BEING A LITTLE BIT TOO HARD. YOU DID WRITE THAT YOU'RE NOT INTERESTED IN GOING BACK INSIDE AND RUNNING THE COMPANY. ARE THERE ANY CIRCUMSTANCES THAT WOULD CHANGE THAT POINT OF VIEW, CHIP?
WILSON: NO. I MEAN, THEY WOULD HAVE TO PAY ME $100 MILLION A YEAR TO DO IT. I MEAN, QUITE FRANKLY. BUT I COULD PRODUCE BILLIONS AND BILLIONS. BUT, YOU KNOW, THE SITUATION THEY ARE IN NOW AS A PUBLIC COMPANY, THEY WOULD RATHER PAY SOMEONE $2 MILLION TO EARN THEM NOTHING.
CRAMER: WELL, WHO IS IT THAT YOU THINK IS DOING SUCH A BAD JOB? SINCE THE CFO CAME IN, THE CONFERENCE CALLS, THE LOGIC HAS IMPROVED . YOU KNOW THAT THEY'RE DOING AN EXPANSION NOW. A LOT OF THE THINGS THAT YOU, I THINK, ARE CRITICAL OF WERE DONE BEFORE THIS REGIME. SINCE YOUR PEOPLE HAVE GOTTEN ON THE BOARD, THE COMPANY IS RATHER IMPROVED. THE PLANS TO EXPAND IN ASIA AND EUROPE SOUND VERY SOUND TO ME. YES, I UNDERSTAND THAT YOU BELIEVE YOU SHOULD BE MAKING 100 – THAT THEY CAN'T AFFORD YOU. THEY CERTAINLY CAN'T AFFORD YOU BECAUSE YOU WOULD WRECK THEIR BOTTOM LINE IF YOU CAME ON. BUT, YOU KNOW, IF YOU THINK THAT THEY'RE SO BAD, WHY DON'T YOU PULL YOUR PEOPLE FROM THE BOARD, OR WHY DON'T YOU PUT TOGETHER A GROUP IF YOU DO INDEED HAVE ALL OF THESE KINDS OF MONEY TO GO BUY IT? BECAUSE I'M SURE THAT – YOU SOUND LIKE YOU CAN DO A MUCH BETTER JOB. WHY DON'T YOU JUST TAKE THE COMPANY IN AND IF YOU HAVE ALL OF THOSE – ALL OF THAT MONEY, THIS MIGHT BE THE OPPORTUNITY OF A LIFE TIME.
WILSON: WELL, I THINK YOU'RE MISSING THE POINT. THE POINT IS IF THE COMPANY IS BEING RUN SO POORLY AND IT'S BEEN NOT JUST THREE YEARS, PROBABLY FOUR OR FIVE YEARS, THEN YOU HAVE TO GO AFTER, NOT THE CEO, BUT YOU HAVE TO GO AFTER WHAT IS THE BOARD BECAUSE THE BOARD IS ACTUALLY NOMINATING THE CEO. BUT IF YOU CAN'T CHANGE THE BOARD, THEN YOU HAVE TO FIGURE OUT LIKE WHY NOT. AND YOU CAN'T CHANGE IT BECAUSE OF THE CLASSIFIED BOARD WHICH ALLOWS – ONLY ALLOWS US TO VOTE AGAINST THREE BOARD MEMBERS AT A TIME. NOW, I'VE ACTIVATED TO PUT TWO ADVENT PEOPLE ON AND KATHRYN HENRY OVER THE LAST THREE YEARS, BUT OBVIOUSLY, WHEN THIS LAST PROXY – BECAUSE THEY DIDN'T DECLASSIFY THE BOARD, I CAN TELL THEY STILL DON'T HAVE THE POWER STRUCTURE WITH INSIGHT TO MOVE IT AGAINST WHAT I WOULD CALL THE OLD SCHOOL BOARD MEMBERS.
CRAMER: OKAY, WELL, LET'S GO OVER THAT. MR. MICHAEL CASEY, CO-CHAIR. HE WAS A GENIUS AT STARBUCKS. I THINK MOST PEOPLE WOULD AGREE TO THAT. WHEN YOU TAKE A LOOK, IS IT MARTHA MORFITT YOU HAVE A PROBLEM WITH? IS IT JON McNEILL WHO WAS AT TESLA? DONE SUCH A REMARKABLE JOB. MAYBE RHODA PITCHER BECAUSE SHE HAS HER OWN LITTLE CONSULTING COMPANY. BUT EMILY WHITE AT SNAPCHAT, ANOTHER EXECUTIVE THAT I FRANKLY WOULD LOVE ON MY BOARD. AGAIN, I THINK THAT THE THINGS THAT YOU'RE MENTIONING ARE THINGS THAT BEFORE THE TURN AT THE COMPANY, THE CEO, I LOOK AT THIS BOARD AND I'M HARD PRESSED TO SEE WHO IS STANDING IN THE WAY. I WOULD LIKE NAMES OF PEOPLE YOU THINK ARE OBSTRUCTIONISTS THROUGH THE TURN BECAUSE I HAVE THIS BOARD OF DIRECTORS IN MY HAND, SIR, AND THIS IS A LIST OF PEOPLE THAT I WOULD BE VERY PROUD TO WORK WITH.
WILSON: WELL, THEN GO AHEAD BECAUSE YOU GET THE SAME RESULTS YOU WOULD BE GETTING IN THE FUTURE AS WE'VE HAD IN THE LAST THREE YEARS. YES THERE ARE SOME –
CRAMER: WELL KEVIN PLANK WOULD KILL FOR THESE RESULTS, SIR. HE WOULD KILL FOR THESE RESULTS RIGHT NOW. HE IS STRUGGLING. LOOK AT ATHLETA – LOOK AT WHAT GAP IS TRYING TO DO. COLUMBIA SPORTSWEAR MAYBE WITH PRANA. I THINK PRANA AND COLUMBIA SPORTSWEAR – MR. BOYLE DOING A GOOD JOB. BUT YOU KNOW, YOU'RE LOOKING AT A GROUP LIKE VF CORP RIGHT NOW. I HAPPEN TO THINK THAT ERIC WISEMAN IS A TERRIFIC EXECUTIVE. BUT HE DOES NOT HAVE YOUR NUMBERS. HE DOES – DECKERS, WHICH HAS TRIED SO HARD TO GET INTO YOGA, THEY DON'T HAVE YOUR NUMBERS. SO I LOOK AT THIS AND I SAY WOW, IF THIS IS BAD, YOU KNOW, WHAT DO I THINK ABOUT THE OTHER PEOPLE IN YOUR INDUSTRY? AND I THINK YOU HAVE A GOOD GROUP HERE. AND I URGE YOU TO WORK WITH THEM A LITTLE MORE BECAUSE THIS IS THE BEST STOCK I'VE GOT IN THE WHOLE GROUP.
WILSON: WELL, THAT IS BECAUSE YOU'VE GOT A VERY LOW BAR YOURSELF. AGAIN, LULULEMON INVENTED THIS BUSINESS. THEY SHOULD HAVE BEEN FIVE, SIX YEARS AHEAD. THEY SHOULDN'T HAVE THE DECLINING MARGINS. THEY SHOULD HAVE BEEN MORPHING INTO OTHER BUSINESSES THAT WOULD HAVE THEIR MARGINS BE WAY, WAY LARGER THAN THEY ARE NOW. IT SHOULD BE WORTH DOUBLE THE AMOUNT OF UNDER ARMOUR. SO NOW, WE'RE TALKING BILLIONS AND BILLIONS OF DOLLARS OF LOST VALUE. SO YOU CAN GO AHEAD AND COMPARE IT AGAINST THE BAR YOU WANT TO, JIM. I'M COMPARE IT AGAINST THE BAR OF WHAT IS POSSIBLE IN THE WORLD.
CRAMER: WELL, I'M COMPARING IT AGAINST THE BAR OF ABOUT 25 RETAILERS THAT I FOLLOW, MANY OF WHOM COME ON "MAD MONEY" AND I DEAL WITH BOTH FRONT AND BEHIND THE SCENES. AND MY FAMILY HAS BEEN IN RETAIL FOR MOST – I COME FROM A BACKGROUND OF RETAIL. AND I'M LOOKING AT MY FATHER WORKED AT GIMBLES, MY MOM WORKED AT – AND MAYBE YOU SAY WELL THAT IS WHY THEY WENT OUT OF BUSINESS. BUT I WOULD TELL YOU THAT IN TERMS OF THE BAR THAT I HAVE, IT IS ABOUT AS TOUGH AS YOU CAN GET OF WHICH MARY DILLON AT ULTA IS THE ONLY ONE THAT HAS REALLY BEEN ABLE TO ACHIEVE A BETTER NUMBER. NOW, MAYBE YOU THINK THAT THE AFFINITY GROUP IS NOT GOOD, OR MAYBE YOU THINK THAT SOME OF THE THINGS THEY ARE DOING ARE NOT CUSTOMER RELATIONS MANAGEMENT THAT YOU WOULD DO. I WOULD LIKE THREE THINGS THAT THEY SHOULD DO RIGHT NOW THAT WOULD MAKE IT SO THAT YOU WOULD THINK THAT LULULEMON CAN RIVAL NIKE, WHICH I THINK IS HISTORICALLY THE BEST, BUT RIGHT NOW THEY'RE NOT DOING SO WELL.
WILSON: WELL, IF YOU JUST LOOK AT WHAT THE COMPANY SAID WHAT IT WAS GOING TO DO ON ITS PROXY OVER THE LAST FIVE OR SIX YEARS, IT WAS GOING TO DO WOMEN'S TOPS, IT WAS GOING TO DO MENS AND IT WAS GOING TO DO INTERNATIONAL. IT SHOULD REALLY HAVE 200 INTERNATIONAL STORES RIGHT NOW. MENS SHOULD BE A BILLION DOLLARS IN SALES AND WOMEN'S TOPS SHOULD BE AT HALF A BILLION DOLLARS IN SALES, WHICH WOULD EASILY JUST DOUBLE THE VALUE OF THE COMPANY RIGHT OFF THE BAT. NOW, THAT IS JUST WHAT THE COMPANY HAS SAID IT WAS GOING TO DO WITHIN THE CONTEXT OF WHAT THAT COMPANY KNOWS WITHOUT ANY VISION. IMAGINE WHAT IT WOULD DO IF IT HAD VISION AND IT WAS FIVE YEARS AHEAD OF THE MARKET PLACE LIKE IT USED TO BE.
CRAMER: WELL, I MEAN, THEY COULD HAVE 10/10 VISION MAYBE, NOT 20/20. YOU KNOW THE MENS NUMBERS THIS QUARTER WERE VERY GOOD, SIR. YOU OBVIOUSLY COULDN'T HAVE ANY CONTEMPT FOR THE MEN'S NUMBERS. AND IN TERMS OF INTERNATIONAL –
WILSON: YES, I COULD. YES, THEY COULD BECAUSE THE NUMBERS ARE SO SMALL.
CRAMER: EVEN THE GREAT MERCHANTS HAVE NOT BEEN – GAP STORES OPENED ALL OVER THE PLACE. AND WALMART OPENED ALL OVER THE PLACE AND WHAT DID THAT DO THEM?
WILSON: THE BAR IS SO LOW THAT ANYBODY COULD DO THAT. YEAH, AND YOU CAN TALK ALL YOU WANT.
CRAMER: ANYBODY?
WILSON: BUT YOU STILL – YOU HAVE A BAD CONTEXT, MAN.
QUINTANILLA: CHIP, YOU TALKED ABOUT TAKING RISKS, NOT MILKING THE BRAND FOR CASH, MOVING INTO OTHER BUSINESSES. BUT THEN WHEN JIM ASKED YOU FOR AN EXAMPLE OF WHAT YOU WOULD DO, YOUR ANSWER WAS TO INCREASE YOUR STORE BASE. DOES IT GO BEYOND THAT?
WILSON: I DIDN'T SAY JUST INCREASE STORE BASE. I SAID WOMEN'S BRAS, WHICH THEY SHOULD'VE OWNED. IT SHOULD BE AT THE LEVEL OF VICTORIA'S SECRET BY NOW.
CRAMER: GEEZ, MR. WEXNER WOULD TELL YOU THAT IS NOT SUCH A GOOD THING, SIR. HE WAS VERY UNHAPPY WITH VICTORIA'S SECRET AND REPLACED ALL OF ITS MANAGEMENT BECAUSE HE FELT FOR THE LAST FOUR QUARTERS IT WAS SUB PAR. SO AGAIN, I'M URGING YOU TO THINK THAT PERHAPS YOU'RE TAKING AN ILL-ADVISED STRATEGY VERSUS THE FACT THAT YOU DO HAVE PEOPLE ON THE BOARD. I'D LIKE TO KNOW WHO ARE THE BOARD MEMBERS STANDING IN THE WAY OF THIS MANAGEMENT RIGHT NOW SO I CAN GO FIND OUT MYSELF EXACTLY HOW WEAK THEY ARE. BECAUSE I LOOK AT THAT BOARD AND I SEE SOME VERY ACCOMPLISHED PEOPLE.
WILSON: YEAH, GREAT AND SO DO I. AND I'M NOT GOING TO GIVE YOU THE SENSATIONALISM OF TELLING YOU EXACTLY WHO, BUT IT IS THE LONGEST STANDING BOARD MEMBERS.
CRAMER: GEEZ, WELL, SO YOU'RE ATTACKING THE MAN FROM STARBUCKS? YOU THINK HE'S – MICHAEL CASEY, THE CO-CHAIR? IS HE – YOU THINK HE IS A WEAK MAN? I KNOW THAT WE COULD CALL HOWARD SCHULTZ AND I THINK HE HAS DONE QUITE A GOOD JOB THERE.
WILSON: YEAH.
CRAMRE: HE DID A GOOD JOB AT STARBUCKS. I MEAN, AGAIN, I'M JUST STUCK WITH THE FOUR WALLS OF THE KNOWLEDGE, OF THE KNOWLEDGE BASE, SIR.
WILSON: YEAH, I UNDERSTAND.
CRAMER: AND I'M NOT TRYING TO BE – I JUST THINK THAT WE JUST GOT TO BE – LOOK, IF THEY WERE DOING BADLY, I HAVE TO TELL YOU, SIR, I WOULD THROW THEM UNDER THE BUS IN A NANOSECOND. I WOULD THROW THEM UNDER A TRAILBLAZING GREYHOUND. BUT I HAVE TO TELL YOU, SIR, THEY AIN'T THAT BAD. BUT I DO APPRECIATE YOU COMING ON AND I DO THINK THAT YOU SHOULD HAVE MODERATED YOUR COMMENTS WHEN YOU CAME ON JUNE 1 WHEN THEY DID NOT HAVE THIS EXCELLENT QUARTER. BUT IT IS A JOY TO JOUST WITH YOU. CHIP WILSON, THANK YOU SO MUCH.
WILSON: YOU HAVE A LOW BAR, JIM.
CRAMER: LOW BAR. CARL, HAVE I EVER SET A LOW BAR? 61 YEARS OLD AND PEOPLE HAVE ALWAYS FELT I HAVE ALWAYS SET WAY TOO HIGH OF A BAR.
QUINTANILLA: VIEWERS LIKE THAT. I GUESS, LOOK, I GUESS HIS AIM HIGH THESIS IS ADMIRABLE. COULD YOU ARGUE?
CRAMER: WELL IT'S TRUE. MOST OF THE CEOS I HAVE ON INCLUDING HOLLY – VERY CONCERNED THAT I HAVE TOO HIGH OF A BAR. MARY DILLON, NO, BECAUSE SHE DID DOUBLE DIGITS. BUT IN TERMS OF WHERE THE BAR IS, LET'S JUST SAY YOU'RE GOING TO GO TO BRAZIL, YOU'RE GOING TO SEE THE HIGH JUMP, THEY'RE NEVER GOING TO MAKE MY BAR.
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