Lululemon's highest-margin product fell 20% in the quarter before O'Neill took over

Lululemon's revenue reached $11 billion in 2025, six times the 2013 level ^[13]. A third of that is about $3.7 billion, and 20% off it is roughly $730 million ^[1][2]. Applied to the whole company, a 20% fall in a category worth a third of sales subtracts about 6.7 points of revenue, more than half of the 12% North American comparable-sales decline ^[3]. The one-third figure is a company-wide estimate and the comp covers North America only, so that is an order of magnitude, not a reconciliation. "We did a double take when Lulu called out that leggings were down 20%," said BNP Paribas analyst Laurent Vasilescu ^[8].

Add the 10 points back to August's 43.9% and M Science's measure, cited by Reuters, had Lululemon near 53.9% before the fall ^[11][4]. Alo took 5.9 points and Vuori 2.2, which is 8.1 of the 10 ^[12][5]. China fell for a second consecutive quarter after rising at double-digit rates as recently as the spring ^[10].

The numbers fit brand erosion. "You have these brands that stretch; they lose that brand equity. They're able to sell a lot, but not mean a lot. And so, what that means is you watch the profits go down," Guggenheim Securities analyst Simeon Siegel said ^[15]. They also fit an assortment and pricing mistake that two or three seasons of editing can fix. In my view the share series decides between them, because a markdown problem shows up in margin while a preference problem shows up as units at Alo and Vuori. If leggings comp positive next quarter and the August share reading holds above 44%, the erosion case is wrong.

"I truly believe that we have an incredible opportunity in front of us: to re-establish who we are at our core and, from that foundation, take Lululemon into its next chapter," O'Neill told employees in a memo published on her first day ^[7]. "That starts with product. Product that is innovative and distinctive," she said in the same note ^[17]. Lululemon added footwear, parkas and skirts to keep growth going, and those categories put it against apparel and running-shoe makers with deeper supplier, wholesale and design relationships ^[14].

She has 27 years at Nike behind her, most recently as president of consumer, product, and brand ^[18]. Nike fell behind on innovation and alienated its core athletically-minded consumer by expanding into lifestyle wear ^[19], and Wall Street analysts attribute its move away from retail partners toward its own site and stores to O'Neill ^[20]. "Incoming CEO O'Neill has a mountain to climb," Jefferies analyst Randal Konik wrote in a research note last week ^[6].