For more than a year, Lululemon has been trying to recapture the magic that made people want to pay roughly $88 to $148 for leggings.
Part of its problems have been self-inflicted.
Jefferies analyst Randal Konik told Fortune in 2025 that Lululemon’s black leggings were too plentiful at discount outlets, and that markdowns at Lululemon had reached “alarming” levels, risking harm to the brand’s “premium” image.
The company’s founder, Chip Wilson, who was forced out in 2013, took out a full-page ad in the Wall Street Journal in 2025. He said the leadership has “systematically dismantled the business model” that made Lululemon great.
He accused the company of prioritizing short-term margins at the expense of innovation.
Most importantly, he wrote that Lululemon had forgotten its inspiration: “the woman who inspires culture.”
“Like a plane crash,” Wilson wrote, “decline rarely happens because of a single failure. It’s a series of mistakes.”
Now, the retailer has a new CEO, Heidi O’Neill, who, after taking the job in May, has begun to remake the company.
Lululemon’s new CEO shares the problem
O’Neill wrote an open letter to employees in September, detailing the brand’s biggest problem.
“As I look ahead, I truly believe that we have 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. 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.
That’s not new insight, as former CEO Calvin McDonald identified product as a problem in the company’s first-quarter 2024 earnings call. During that call, he introduced a new product leadership team and charged them to “drive innovation, design technical product that looks great, and solve for the unmet needs of our guests.”
O’Neil, who came from Nike, was hired by Lululemon for her product background.
“Lululemon’s next chapter of success requires a leader who understands the intersection of product innovation, design, and consumer connection. Heidi’s experience is anchored precisely there, with a strong track record of transforming and growing brands at scale, delivering breakthrough ideas and initiatives, and serving as a knowledgeable change agent,” the company shared in a press release touting her hire.
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Lululemon needs to rebuild its image
GlobalData Managing Director Neil Saunders explained the problems facing the apparel brand.
“If the competitive environment tightens and your organic growth is not quite as good, you should really be doubling down on things like innovation, keeping your customers loyal, looking for opportunities as to how to expand the share of wallet, even if that’s challenging. But Lululemon actually did the opposite. It really took its foot off the gas,” he told CBS News in February.
RTM Nexus CEO Dominick Miserandino believes that the brand can make a comeback.
“I think Lululemon can absolutely get its mojo back. It still has brand recognition, loyal customers, and a strong position in the market. But it needs products people are excited to buy again. You can only introduce so many new colors of leggings before customers start looking for something different,” he told TheStreet.
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New product alone likely won’t fix Lululemon’s problems, as the company went down that road once before.
“Lululemon plans to increase new styles as a percentage of its mix, from 23% currently to 35% by next spring, in order to spark a return to growth for its U.S. business amid heightening competition,” the company shared roughly a year ago, RetailWire reported.
Lululemon faces multiple challenges
When Lululemon shared those changes in September 2025, Scott Benedict, client director for Sam’s Club at NielsenIQ, explained the athletic apparel retailer’s problems and the path to return to growth.
“Stalled growth at Lululemon? It’s not just one thing — it’s a perfect storm. U.S. demand is softening as consumers pull back, the company’s rhythms have grown predictable, and tariffs are eating into profit margins. At the same time, athleisure is more crowded than ever — brands like Vuori and Alo Yoga are grabbing attention with fresh styles and strong marketing, undercutting Lululemon’s cachet,” he wrote on RetailWire.
He shared a roadmap for a recovery.
“So what’s the play? First, don’t overhaul your classics if they still work, but treating them like fossils won’t fly, either. Bring freshness into evergreen franchises. Think unexpected colors, surprising fabrics, tighter development cycles,” he added.
The retail analyst also thinks the company needs to move into new areas.
“Invest in genuinely new franchises — menswear, footwear, maybe even casual work-from-home lines. These aren’t distractions — they’re growth vectors. If they pull this off, Lululemon can reset. Lean into fast-paced innovation in the U.S., even as international markets soak up slack, and right-size costs around legacy categories,” he posted.
Lululemon also maintains tight control over where its merchandise is sold. The company sells through its own stores and website, with select products available through official wholesale and strategic sales programs.
Higher prices and selling through its own stores and website, Morningstar wrote back in 2023, can actually be an asset for the brand.
“Competitors who sell through partners lack this level of control and must share margins with retailers. Moreover, competing brands may lose their integrity if their product is discounted or sold through unpopular retailers. We believe Lululemon’s model helps preserve its status as a premium brand and supports our view that it has a narrow moat,” the analysts shared.
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