Next Lululemon head will have to refashion the retailer for success: experts

Lululemon CEO Calvin McDonald is seen after speaking at a news conference at the company's headquarters, in Vancouver, on Thursday, May 25, 2023. THE CANADIAN PRESS/Darryl Dyck

Up until the last few years, people who discovered that Darrell Kopke worked for Lululemon Athletica Inc. in its early days often had two remarks: my daughter or sister loves that brand, and can I get a discount?

These days, he comes across fewer Lululemon loyalists.

“Don’t get me wrong, I still see Lulu, but I see a lot more Alo now than I ever have,” said Kopke, who worked at Lululemon in various management roles from December 2001 to January 2009.

Competition from Alo — the California-based brand donned by just about every Gen Z who likes to downward dog and celebs such as Hailey Bieber and Kaia Gerber — is just one of the problems Lululemon is facing as it prepares for a leadership shakeup.

In the last two years, Lululemon’s rivals have upped their game, while the Vancouver-based retailer has been criticized for a lack of new styles, had to remove a leggings line that failed with customers, and saw its stock tumble by almost 60 per cent.

None of the missteps escaped the notice of Chip Wilson, Lululemon’s estranged founder, who used a full-page Wall Street Journal ad to blame CEO Calvin McDonald for a decline Wilson equated to a “plane crash.” When McDonald announced in December he’d step down, Wilson started lobbying for three of his nominees to be added to the Lululemon board.

Lululemon is still evaluating Wilson’s suggestions and has named its chief financial and commercial officers as co-CEOs while it searches for McDonald’s replacement.

Experts widely agree the company can turn things around if it learns from its past mistakes.

“You’re not starting from scratch. You have a large revenue,” said Tamara Szames, a longtime retail strategist and founder of Arc + Axis Consulting. “The challenge will be how do you maintain your current customer base while going after the new one that’s going to bring you forward?”

Lululemon hasn’t offered any hints about how it could strike that balance — if that’s even its goal. The company said McDonald is not available for interviews and when asked about its strategy pointed The Canadian Press to its most recent earnings call, where McDonald said Lululemon “is poised to innovate new products and experiences and welcome more markets and guests.”

When he was hired away from Sephora in 2018, McDonald was determined to grow the business. He launched a skincare line and then a smart mirror that mimics a personal trainer.

Neither were hits, but he did triple sales, grew China into its second-largest market, expanded the menswear division, and landed both a coveted contract to clothe Canada’s Olympic team and licensing deals with the NHL and NFL.

Yet analysts still believe the brand is feeling a bit tired. They say stores have become bloated with products catering to too many demographics, and don’t seem fresh.

While Lululemon has had some recent hits with belt bags and keychains, observers think the brand has now been playing it too safe for too long and its new CEO will have to get back to boundary-pushing or risk losing sales to rivals.

“When Lululemon launched, they had the legging wall,” Szames said of how the retailer’s most famous product was displayed in stores.

“Today, you still see that legging wall. There’s been no evolution and innovation of how that product is presented to the customer to make it seem refreshed and renewed.”

A new CEO will have to liven up the product mix, she said.

McDonald conceded in late 2024 that the company had reduced its “newness” — a measure of how fresh its colours, prints, patterns and silhouettes feel to customers.

Shoppers noticed and many walked out empty-handed. Lululemon had to cut its full-year guidance, reorganize its product team and put more emphasis on modernizing its merchandise seem more current.

While new product flowed for much of 2025, Neil Saunders, managing director of market research firm GlobalData, has said the company now “seems to be going into junkification territory with heavily branded hoodies and tops that simply do not speak to the traditional finesse and quality of the Lululemon brand.”

The company has been left with more unsold inventory and has resorted to marking it down — a tactic Saunders said Lululemon never had to use before.

Aside from eating into profits, discounts condition shoppers to wait for sales and cheapen the brand.

“It’s a crowded market and there’s no reason to pay Lulu prices for the basic styles, boring colours and undifferentiated fabrics,” warned Elisha Ballantyne, a Toronto-based retail consultant who has worked for Target, Walmart and Zellers, in an email.

Nike, Alo, Vuori, GymShark and Fabletics have moved in on Lululemon’s customer base by introducing more technical fabrics and using celebrity ambassadors in their marketing.

Meanwhile, niche upstarts have taken on categories that would have been logical next steps for Lululemon, like swimsuits and cycling apparel. Left on Friday, which was started by ex-Lululemon staff, outfitted Canada’s national women’s beach volleyball team at the Paris Games, and 7Mesh was so much of a challenger that it got an investment from Lululemon in 2017.

“Does anybody copy Lululemon anymore? It’s hard to believe that would be the case,” said Kopke.

“If you walk into a Lulu store, in a lot of ways, it does look like the Gap and that’s just not what it was intended to be.”

He and Szames agree McDonald’s successor will have to move quickly to reposition the company as the “it” brand for high-quality athleticwear.

They say that can be done if the company shrinks the number of products it sells, giving Lululemon more time and space to ensure what it does offer is innovative, fresh and ahead of its competitors.

“Instead of going for share of closet, which is what they’re doing now, which is why they have every piece of clothing imaginable, they should go for share of wallet,” Kopke said.

The easiest way is to lean into Lululemon’s roots as a lifestyle brand, he said. The 28-year-old company was founded as a design studio by day and a yoga studio by night before morphing into a standalone store in Vancouver’s Kitsilano neighbourhood in November 2000.

Part of its early appeal was how it created community by hosting in-store yoga sessions.

Kopke said Lululemon has the capital to take that approach even further and perhaps buy or launch a premium gym chain.

“They opened up a coffee shop in Texas with much fanfare. That’s great. You know who opened up coffee shops in their stores 10 years ago? Everyone else,” he said.

“Innovation would be building the next Equinox and building an entire experience where people can eat, people can shop, people can hang out and then people can work out.”

Szames wouldn’t go so far as to open a gym, but said community will have to be at the heart of whatever Lululemon does because it’s ultimately what gets people to spend.

“As CEO, the first thing that I would do is understand what the message is from the consumer -- the existing consumer and the consumer that has left the building,” she said.

Tara Deschamps, The Canadian Press