Lululemon right this moment named Heidi O’Neill, a 26-year Nike veteran, as its subsequent CEO, ending a monthslong search to switch Calvin McDonald, who stepped down from the highest job after six years on the firm.
O’Neill, most just lately Nike’s president of shopper, product, and model, will begin September 8 and be based mostly in Lululemon’s Vancouver headquarters. The selection indicators the place Lululemon’s board thinks the corporate must go subsequent—and it’s value asking whether or not they’ve gotten the prognosis proper.
For a lot of the final decade, Lululemon was one of many fastest-growing attire manufacturers on the planet. Underneath McDonald, who took over as CEO in 2018, the corporate more than tripled its annual revenue from $2.6 billion to $10.6 billion, expanded into 30 international locations, and turned a cult yoga label into a worldwide trend powerhouse whose blazers and trousers competed for closet house with workwear manufacturers. China grew to become its second-largest market. Its footwear line, launched in 2022 after years of growth, opened up a complete new income stream.
Then development stalled. Final 12 months it slowed to 10%, down from 19% the 12 months earlier than, dragged by U.S. tariffs, weaker shopper spending, and a string of product missteps together with a broadly panned Disney collaboration. Chip Wilson, Lululemon’s controversial founder and largest particular person shareholder, took out a full-page Wall Street Journal ad harshly criticizing the corporate’s path. This prompted the inventory to tumble and presumably contributed to McDonald’s determination to depart.
However now, the corporate is hoping to show the web page. In an announcement, Lululemon’s board referred to as O’Neill “a visionary, consumer-focused government” with a observe file of “driving disruptive change and development at scale.” Throughout her tenure at Nike, the corporate grew income from $9 billion to greater than $45 billion. Her function was eradicated final spring as new CEO Elliott Hill restructured the corporate in an try to reverse years of sluggish gross sales.
Nonetheless, it’s unclear whether or not Lululemon will succeed by following Nike’s playbook. In some ways, Lululemon constructed its empire by doing the other of what the activewear big has achieved. It’s identified for tightly curated drops as a substitute of fixed collabs, an elevated wardrobe ethos as a substitute of stadium-scale marketing, and a material obsession as a substitute of athlete endorsements.
Nike’s current struggles have been blamed, partly, on a drift towards direct-to-consumer scale on the expense of product distinctiveness—precisely the lure Lululemon must keep away from. Traditionally, Lululemon’s best-selling merchandise have been profitable due to their distinct materials.
The Align franchise has develop into a $1 billion business due to Lululemon’s buttery-soft proprietary Nulu fabric. The ABC pants and Daydrift trousers have been hits as a result of Lululemon spent years creating material that appeared work-appropriate however felt like activewear. That type of product instinct is nearer to a trend home than a sportswear big.
O’Neill will inherit an organization that has misplaced belief with shoppers. This spring, the local weather advocacy group Action Speaks Louder built a fake brand called Mumumelon, which made copies of Lululemon staples however with renewable power. The marketing campaign drew yoga influencers right into a public dialog about how slowly Lululemon has moved by itself sustainability commitments. Lululemon has referred to as Mumumelon “disappointing.”
The activists behind Mumumelon understood one thing Lululemon’s board might have missed: The model’s prospects aren’t asking for a much bigger Lululemon. They’re asking for a greater one—one whose merchandise, provide chain, and viewpoint nonetheless really feel thought-about. The world might be watching to see if O’Neill is ready to steer Lululemon out of those uneven waters.
