Lululemon 因品牌受损与管理不善而面临严重下滑，新任 CEO 的人选也被视为负面。

Last year, we published a video about the rise and fall of Lululemon. Over the past decade, Lululemon has grown rapidly and established itself as one of the world’s largest luxury sportswear brands.

The company was extremely profitable and became one of the most sought-after stocks on Wall Street. But over the past three years, the company has experienced a historic decline.

You can see that just by looking at the stock price, which peaked at over $500 in late 2023. This gave the company a market capitalization of over $60 billion.

When we prepared our video last year, the stock price had already dropped to around $250. Since then, the stock price has dropped by more than half again to just $100.

Lululemon's valuation has fallen to just $11 billion, about one-sixth of its peak value. The company's founder, Chip Wilson, resigned more than a decade ago, but he remains a major shareholder.

He feels extremely angry about the mismanagement of the brand he created.

In October of last year, he paid for a full advertisement in the Wall Street Journal, in which he criticized the company and said that a radical change was needed to revive the declining brand.

The task of saving Lululemon falls to the company's new CEO, Heidi O'Neil. In this video, we'll uncover the root causes of Lululemon's decline and whether there's still any hope of a turnaround.

Chip Wilson presented his case against management through a full-page advertisement in the newspaper.

In the second quarter of fiscal year 2026, Lululemon generated revenues of $2.4 billion, a 4% year-over-year decrease. Lululemon is having an unusual fiscal year. The second fiscal quarter ended on August 2, 2026, so it is about a month behind the annual calendar.

On the surface, a 4% drop doesn't seem catastrophic, but this decline occurred despite the company continuing to open new stores around the world. Over the past year, they opened 41 new stores.

This led to a 5% increase in the number of their stores, bringing the total to 825 stores.

The most important metric to look at is the growth of sales at similar stores. This measures the change in sales of stores that have remained open for at least 12 months. Therefore, it excludes the impact of opening new stores.

In 2023, similar store sales were growing by more than 10%. In the second quarter of 2026, comparable sales shrank by 9%. This is a catastrophic number. For the third fiscal quarter, the company expects revenues to decline by 10 to 11%. So, the bleeding hasn't stopped yet.

In December 2025, former Lululemon CEO Calvin McDonald resigned amid disgrace. Someone had to take the blame for the company's slow growth.

In April 2026, the company appointed Heidi O’Neill as its new CEO. Her employment contract with Nike contained a non-compete clause, so she was not allowed to take the top job at Lululemon until September.

Meanwhile, the company was led by two interim chief executives, CFO Megan Frank and Chief Commercial Officer Andre Mesmer, so the company was without effective leadership for a critical 9 months.

Interim CEOs can get things done, but they generally refrain from making strategic changes because they lack the mandate to do so. Lululemon announced its disastrous second-quarter earnings results on September 3, just days before O'Neill took office.

In the earnings call, Megan Frank explained: "As we entered the second quarter, we faced negative comments in the media and on social channels, which impacted footfall. Customer response to some new product launches was also slower than we had planned, which contributed to a moderation in the sales trend."

"The sales trend for leggings so far this year has been below our expectations, with sales down approximately 20% in the second quarter."

In January 2026, Lululemon launched a new line of leggings called "Get Low". This line was immediately met with complaints from customers who said it was too thin and that what was underneath could be seen.

As a result of this uproar, they removed the "Get Low" collection from their website, only to bring it back again a week later. A Lululemon spokesperson said: "Last week, we temporarily paused online sales of the Get Low range in North America to review initial customer feedback and insights."

"Based on what we have learned, we have updated our product education information to incorporate new guidance on fit, sizing and features to better support customers' purchasing decisions."

On the website, they recommended choosing a larger size and wearing it with seamless underwear of the same color. Instead of taking responsibility for releasing a defective product, they blamed customers for buying sizes that were too small.

The brand faced a very similar controversy in 2013 when they launched a new line of yoga pants that were transparent.

Lululemon founder Chip Wilson blamed these problems on customers being too indebted. This comment provoked a strong reaction, and he was forced to resign.

To be fair, he has made plenty of controversial comments before that as well. This was the straw that broke the camel's back. After Chip Wilson's departure, Lululemon made an effort to become more inclusive.

They started offering much more options for larger sizes.

However, they made the same public relations mistake that Wilson made when responding to the latest controversy over clothing transparency. Historically, China has been a key growth market for Lululemon.

China has a large and growing middle class, which is ideal for a luxury sports brand.

But growth in China has slowed recently. In the last quarter, sales in China grew by only 4%. This is despite them opening many new stores during the past year. Sales at similar stores decreased by 2% year-on-year.

Part of this stems from a cultural debate. In June 2026, Lululemon hosted a marketing event in China. They placed what they believed to be a traditional Chinese drum on the Great Wall of China with a large Lululemon emblem printed on it.

But it turned out that this was actually a Japanese-style drum.

This caused a backlash on Chinese social media, forcing Lululemon to issue a public apology. Chip Wilson is disgusted by the mismanagement of the brand he founded. So much so that in October of last year, he paid for an entire advertisement in the Wall Street Journal titled "Lululumon in Free Fall".

He explained, "LuluLemon's managers systematically dismantled the business model and lost the employees who possessed the corporate knowledge that made the company great."

Like an airplane crash, a downturn is rarely caused by a single failure. It's a series of consecutive mistakes. When the founder leaves, board members tend to fill committees with operational or financial managers committed to quarterly results.

A company that lacks a visionary loses its unique voice in product and long-term strategy, the strategy that protects its success.

Wilson has long criticized what he calls “gapification.” Lululemon was created to meet the social, economic, and athletic needs of the elite. The clothes are high quality and expensive, intended only for the wealthy.

Therefore, discounts and promotional offers should be kept to a minimum.

This type of brand is inherently exclusionary. Wilson strongly opposes plus-size options and models who do not possess traditional beauty standards. He believes this reduces the value of the brand.

If you try to appeal to everyone, you'll end up becoming like "Gab". Anyone can shop at Gap, but no one will pay high prices for such an ordinary brand.

In pursuit of growth, Lululemon squandered $1 billion on the Mirror and wiped out $10 billion in market value with a completely inappropriate collaboration with Disney.

To increase margins, managers cut store design costs and switched to non-technical fabrics, eroding the brand's premium status. In 2020, Lululemon acquired a company called Mirror for $1 billion.

Mirror has created large screens that you can place in your home to help you exercise.

The Mirror grew rapidly during the pandemic, but it turned out to be just a passing fad. Once the pandemic ended, Mirror sales plummeted to almost zero. In 2023, Lululemon closed the Mirror company, admitting a total loss.

In retrospect, this was clearly a waste, but given Lululemon's size and profitability at the time, wasting a billion dollars was not catastrophic. Taking risks with strategic acquisitions is not necessarily a bad thing.

In late 2024, Lululemon announced a collaboration with Disney to produce clothing bearing both brands, featuring Mickey Mouse and a children's text line.

This collaboration was met with extremely negative reactions, with many consumers describing it as disgusting. It is important to emphasize how dominant "Lululimone" was at the height of its success.

Within its niche of luxury women's sportswear, it was in a league of its own.

There has always been competition, but rival brands were considered mere cheap imitations. If you could afford "Lululumon," you would buy "Lululumon."

Real competition in the high-end category has become a relatively recent phenomenon. The main competitor is "Alo", which has expanded very rapidly over the past few years. There is also a competitor called "Fury", but it focuses mainly on men's clothing, while "Lululimone" focuses primarily on women's.

Of the two, "Alo" is considered the most serious threat of all. The type of clothing they produce is very similar in terms of quality and price lists. Given that Lululemon had a dominant brand, Aloo should not have been able to compete on an equal footing.

The mismanagement of Lululemon created a loophole, and this goes back to the "turning it into a jungle" problem that Chip Wilson warned about for years.

Let's take a look inside a typical "Lululumon" store. The first thing you'll notice is that it's extremely crowded. In the short term, this is a good thing. More customers mean more revenue.

But there are also plenty of customers at Gap stores. The reason for having such a large number of customers is the discounts. Here we see a whole shelf of sweatpants priced at $39 each.

This store is located in Canada. 39 Canadian dollars is equivalent to 28 US dollars. This is far too readily available. Many people can afford that.

Also note how crowded the store is. Not in terms of the number of customers, but in terms of the abundance of clothing shelves. All the different colors, sizes, and styles are piled together.

This is not a luxury shopping experience. It cannot be considered as such under any circumstances.

For this reason, they are no longer able to charge high prices. Now let's take a look at the "Alo" store. A much more organized and spacious store. Most of the clothes are either white or black, giving a more sophisticated impression.

There are no large signs advertising low prices. In other words, it's nothing like a Gap store at all.

In an attempt to maximize short-term profits, Lululemon increased production, flooding the market with countless piles of colorful clothing. This inevitably leads to stockpiling, which necessitates discounts and promotions, ultimately destroying brand value.

So, what will the new CEO, Heidi O'Neill, do to change things? As of the time of recording this video, she had been in office for less than a week. We have no idea what she will do, but I think choosing a former Nike executive was a bad decision.

Okay, guys. This concludes today's video. What do you think of Lululemon? Tell us your thoughts in the comments section below.