Lululemon's Legging Crisis: Can New CEO Save the Brand?

Lululemon has been struggling to recapture its former appeal for over a year, facing issues exacerbated by its own strategic decisions. In 2025, its founder, Chip Wilson, publicly criticized the company's leadership, stating they had "systematically dismantled the business model" that made Lululemon successful, accusing them of prioritizing short-term profits over innovation.

Following these concerns, new CEO Heidi O'Neill, who took over in May 2025, has outlined a plan to "re-establish who we are at our core." This initiative emphasizes product innovation and distinctiveness to give customers a reason to choose Lululemon again. The previous CEO had also identified product as a key problem during the first-quarter 2024 earnings call.

Analysts note that Lululemon failed to double down on innovation and customer loyalty when facing a tighter competitive environment. The brand is now contending with a crowded athleisure market, with competitors like Vuori and Alo Yoga gaining traction. Softening U.S. demand and tariffs also present significant hurdles.

To address these challenges, Lululemon plans to increase new styles in its product mix and is exploring expansion into new areas such as menswear and footwear. Despite these efforts, the company maintains tight control over its distribution channels, selling primarily through its own stores and website, a strategy that Morningstar identified in 2023 as beneficial for preserving its premium brand status and brand integrity.