Lululemon at present named Heidi O’Neill, a 26-year Nike veteran, as its subsequent CEO, ending a monthslong search to interchange Calvin McDonald, who stepped down from the highest job after six years on the firm.
O’Neill, most not too long ago Nike’s president of shopper, product, and model, will begin September 8 and be primarily based in Lululemon’s Vancouver headquarters. The selection alerts 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 many 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 world vogue powerhouse whose blazers and trousers competed for closet area with workwear manufacturers. China grew to become its second-largest market. Its footwear line, launched in 2022 after years of improvement, opened up an entire new income stream.
Then progress 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 extensively 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 route. This brought on the inventory to tumble and presumably contributed to McDonald’s resolution to go away.
However now, the corporate is hoping to show the web page. In an announcement, Lululemon’s board known as O’Neill “a visionary, consumer-focused government” with a monitor file of “driving disruptive change and progress at scale.” Throughout her tenure at Nike, the corporate grew income from $9 billion to greater than $45 billion. Her position was eradicated final spring as new CEO Elliott Hill restructured the corporate in an try and 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 large has performed. 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 latest struggles have been blamed, partially, 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 turn out to be 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 seemed work-appropriate however felt like activewear. That form of product instinct is nearer to a vogue home than a sportswear large.
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 vitality. The marketing campaign drew yoga influencers right into a public dialog about how slowly Lululemon has moved by itself sustainability commitments. Lululemon has known as Mumumelon “disappointing.”
The activists behind Mumumelon understood one thing Lululemon’s board might have missed: The model’s clients aren’t asking for an even bigger Lululemon. They’re asking for a greater one—one whose merchandise, provide chain, and viewpoint nonetheless really feel thought of. The world might be watching to see if O’Neill is ready to steer Lululemon out of those uneven waters.
