Lululemon Athletica‘s new chief executive, Heidi O’Neill, took the top job on 8 September, inheriting a company whose core leggings business is in freefall and whose North American comparable sales fell 12% last quarter, a deterioration that has accelerated since her appointment was confirmed in April.
Heidi O’Neill Lululemon CEO faces sliding leggings demand from day one
Leggings, which account for roughly one-third of Lululemon’s revenue by some estimates and are its highest-margin products, plunged 20% last quarter, stunning analysts.
Interim chief executive Meghan Frank acknowledged the problem on Thursday. ‘We remain committed to the category, but there are shifts occurring with guests looking for away from body silhouettes,’ Frank told analysts, according to Reuters.
‘We did a double take when Lulu called out that leggings were down 20%,’ said BNP Paribas analyst Laurent Vasilescu.
Jefferies analyst Randal Konik put it bluntly: ‘Incoming CEO O’Neill has a mountain to climb.’
A Nike veteran walks into a familiar crisis
O’Neill spent 27 years at Nike, most recently as president of consumer, product, and brand. Wall Street analysts say she led Nike’s pivot away from wholesale partners toward its own stores and website, a move that proved costly. Nike has also fallen behind on innovation and alienated its core athletic consumer by expanding into lifestyle wear.
Lululemon’s problems carry a similar shape. Its revenue rose sixfold between 2013 and 2025, reaching $11 billion, but the push into footwear, parkas and skirts pulled focus from the technical activewear that built the brand. Discount bins, once unthinkable for a premium label, became a common sight.
Citing data from M Science, Reuters reported that Lululemon’s market share fell 10 percentage points to 43.9% in August, with rivals Alo and Vuori picking up 5.9 and 2.2 additional percentage points respectively.
‘A combination of an incredibly boring assortment, too much non-core product that misses on both fashionability and style, and an absence of good technical innovation have all contributed to a rapid loss of brand heat,’ wrote GlobalData managing director Neil Saunders.
O’Neill, in a memo to staff on her first day, acknowledged the reset required. ‘That starts with product. Product that is innovative and distinctive, and that gives our guests a reason to choose us, love us, and root for us, again,’ she wrote.
She also told employees she believed the company had ‘an incredible opportunity in front of us: to re-establish who we are at our core and, from that foundation, take Lululemon into its next chapter.’
She is credited with building Nike’s women’s business from a peripheral category into a multibillion-dollar revenue stream, a track record she will need to replicate in a different context.
‘You have these brands that stretch; they lose that brand equity. They’re able to sell a lot, but not mean a lot,’ said Guggenheim Securities analyst Simeon Siegel. ‘And so, what that means is you watch the profits go down.’
Lululemon’s shares have already fallen 80% from their 2023 all-time high. The company cut its full-year outlook for the second time in three months last week, and China sales, which were growing at double-digit rates as recently as the spring, fell for the second consecutive quarter.
Founder and former CEO Chip Wilson criticised O’Neill’s appointment last spring, saying she would likely follow the board’s ‘failed’ strategy. A non-disparagement agreement between Wilson and Lululemon expires in November 2027, at which point he is free to resume publicly targeting the board.
O’Neill’s first task, analysts say, is to prune the assortment, restore focus on best-selling core items, and prove to investors that her track record with women’s product translates to a full turnaround. The company’s next earnings update will be the first test of whether her reset is gaining any traction.
