With a new head honcho at the helm, Canada’s biggest apparel brand will try to turn things around one pair of $100 leggings at a time.
Driving the news: Former Nike exec Heidi O’Neill takes the reins as CEO of Lululemon today, just one week after the athleisure brand saw its stock sink to an eight-year low. As O’Neill takes over, shares in the Vancouver retailer are down over 50% on the year.
Catch-up: Slumping sales and high-profile product mishaps were already hampering the brand, but things went from bad to worse in May when Lulu mistakenly used a Japanese taiko drum at a Chinese yoga festival on the Great Wall. Public blowback was fierce and comparable sales in the crucial Chinese market fell 8% last quarter (after 13% growth in Q1).
The company has also struggled with the prevalence of online dupes. Lulu even trademarked the term “Lululemon dupe” last year, giving it more power to go after retailers, influencers, and other marketers that overtly advertise Lulu knock-offs.
Why it matters: Lululemon basically invented workout clothes that look cool enough to wear outside of the gym, but it’s been steadily losing its grip on the athleisure category. Lulu’s share of the athleisure market shrank 10 percentage points in August, according to one analysis, while rivals Alo Yoga and Vuori each grabbed a bigger share.
A big part of that decline has been the retailer’s inability to quickly adapt to new fashion trends. The resurgence of baggier pants has coincided with a 20% drop in sales of its leggings, by far its best-selling product category.
Our take: Lululemon’s brand can still open wallets, but if it continues to cling to the styles that made it a household name in the 2010s, its cultural cachet (and the premium price point it permits) will eventually disappear.—LA
