Elliott Investment Management has accumulated a stake of more than $1bn in Lululemon Athletica, according to a report by the Wall Street Journal.

The move positions the activist investor as a significant shareholder as the athletic-wear group enters a period of strategic change.

The investment comes as Lululemon prepares for a leadership transition. Chief executive Calvin McDonald is set to step down at the end of January, prompting a search for a successor.

People familiar with the discussions said Elliott has been working for several months with retail executive Jane Nielsen. Nielsen previously served as chief financial officer and chief operating officer at Ralph Lauren.

The Wall Street Journal reported that Elliott views Nielsen as a potential candidate for the chief executive role. Analyst commentary cited by Bloomberg described Nielsen as “one of the most well-respected and capable executives in the industry,” noting her experience leading turnarounds at Ralph Lauren and Coach.

Lululemon has faced slowing growth in recent quarters as competition intensifies from newer brands and lower-priced rivals. The company recently raised its full-year outlook and announced McDonald’s departure, which helped lift its share price.

Lululemon shares rose as much as 8.1% in pre-market trading following reports of Elliott’s involvement. The stock has fallen 46% this year, leaving the company with a market value of about $24bn.

A representative for Elliott declined to comment. Lululemon did not immediately respond to a request for comment.

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