Heidi O’Neill has taken over as chief executive of Lululemon Athletica at a difficult moment, with the sportswear group’s core North American business weakening and sales of its signature leggings falling sharply.
The former Nike senior executive became chief executive on Tuesday, after Lululemon reported a 12% decline in comparable sales in North America for its latest quarter. The company also lowered its full-year outlook for the second time in three months.
The deterioration has accelerated since O’Neill’s appointment was announced in April. Lululemon had been led on an interim basis by two senior executives since late January, while investors became increasingly concerned that the athleisure pioneer had lost some of the appeal that once inspired strong customer loyalty.
“Incoming CEO O’Neill has a mountain to climb,” Jefferies analyst Randal Konik wrote in a research note.
Lululemon’s new chief faces a fight to restore growth
One of the most significant setbacks in the latest results was a 20% fall in leggings sales. The category is estimated to account for about a third of Lululemon’s revenue and includes some of its highest-margin products.
“We did a double take when Lulu called out that leggings were down 20%,” BNP Paribas analyst Laurent Vasilescu said.
Sales in China also fell for a second consecutive quarter, having increased by double-digit percentages as recently as the spring.
Lululemon’s market share has come under pressure from newer rivals. Data from M Science showed its share falling by 10 percentage points to 43.9% in August, while Alo and Vuori gained 5.9 and 2.2 percentage points respectively.
The company’s revenue increased sixfold between 2013 and 2025, reaching 11 billion dollars. But its pursuit of continued expansion took it into footwear, parkas and skirts, putting it into more direct competition with established clothing and running-shoe brands.
Analysts have argued that the expansion distracted Lululemon from its central proposition: distinctive, technical activewear. Some products have subsequently appeared in discount bins, a development that would have been unusual during the brand’s earlier rise as a premium label.
Simeon Siegel, an analyst at Guggenheim Securities, said brands could expand their sales while losing some of their meaning to consumers, ultimately putting pressure on profits. GlobalData managing director Neil Saunders described Lululemon’s range as lacking technical innovation and containing too much non-core merchandise.
O’Neill has said the business must reconnect with the qualities that originally made it successful. In a message to staff on her first day, she said the company needed to “re-establish who we are at our core” before moving into its next phase.
She also said the recovery would begin with products that were “innovative and distinctive” and gave customers a reason to choose, love and support the brand again.
O’Neill’s Nike experience under scrutiny
O’Neill spent 27 years at Nike, most recently as president of consumer, product and brand. The sportswear giant has faced similar concerns over innovation and its expansion into lifestyle clothing, while its shift towards selling directly through its own shops and website has also drawn criticism from analysts.
Her record includes turning Nike’s women’s division from a relatively minor category into a multibillion-dollar growth engine. At Lululemon, however, she is expected to narrow the range, concentrate on its strongest products and improve fabrics, fit and performance features.
Time may be limited. Lululemon’s shares have fallen 80% from their 2023 peak, raising the prospect of pressure from activist investors if the new leadership fails to demonstrate early progress.
Chip Wilson, Lululemon’s founder and former chief executive, criticised O’Neill’s appointment last spring and said she was likely to continue what he called the board’s “failed” strategy. An agreement preventing public criticism between Wilson and Lululemon expires in November 2027, when he will be free to resume attacking the board and potentially turn his attention to O’Neill.
