It’s early evening in Toronto’s Leslieville neighbourhood, and in an airy room with exposed-brick walls, a group of women are lying on Reformer Pilates machines. Gripping resistance-weighted bands, bracing their cores and extending their legs in the air, they move through a ballet of minor agony, the likes of which are danced, in various forms, in gyms and studios around the world.
These women, perspiring in their spare time, should be Lululemon’s people. And in the warm light of Assembly Movement’s studio, the brand’s silver, Omega-shaped logo does glint off more than a couple pairs of leggings. But so do the clustered dots of the Sweaty Betty trademark, the stylized “A” of Gap’s Athleta, and other labels that the Vancouver apparel pioneer paved the way for.
When she started teaching Pilates nine years ago, instructor Ciara McKell says, a class like this would have been awash in Lululemon: “Now, I find there’s way more variety.”
Since its founding in 1998, Lululemon Athletica has created the blueprint for the booming athleisure market, a field that’s now as crowded as a trendy spin class during the after-work rush.
What was once a relatively new idea—workout wear for women that was attractive enough to become a streetwear status symbol—has grown into an industry worth billions. Lululemon, too, has grown into a global behemoth. But in recent years, intense competition has the brand breaking a sweat. As a scrappy Canadian startup, Lulu-lemon used to set the trends; now, it’s begun falling behind. And though the company is growing internationally, with operations in more than 30 countries—an expansion that has helped to triple its revenues in just six years—sales have slipped in North America, its biggest market.
Investors have soured on Lululemon’s growth prospects, sending the stock price plunging from an all-time high of more than US$511 a share in late 2023 to roughly US$130 as of early May—lower than the pandemic dip it took in March 2020, before the markets realized just how good COVID-19 would be for stretchy pants.
It’s been a time of turmoil for Lululemon, ever since signs of weakness in the U.S. business began to show in the spring of 2024. And the heat has ratcheted up in the past year, which has seen the departure of its CEO, a public battle with its founder, Chip Wilson, and new pressure from activist shareholder Elliott Investment Management, which began pushing for a new hand-picked CEO to revitalize the brand.
Earlier this year, the company was forced to briefly pull its line of “Get Low” leggings, following complaints that they were see-through—an unwelcome echo of a 2013 dust-up over sheer yoga pants. Wilson, who stepped down as chair after suggesting at the time that “some women’s bodies just actually don’t work for” the clothes, wasn’t shy about taking the company to task this time around, decrying the flaws and declaring the Get Low episode “a new low for Lululemon.” (The leggings are back for sale at $118, and the website recommends sizing up and wearing “skin-tone, seamless underwear” for best results.)
More recently, the company has provided signals about muted growth in the year ahead, announced shifts in its board and hired a new CEO—former Nike executive Heidi O’Neill, who doesn’t take the job for another four months and whose appointment sent the stock tumbling 13% the following day.
Given all these headlines, it can be easy to think Lululemon is on the brink of collapse. But the company also does US$11 billion in annual sales, has no bank debt and retains a significant, if no longer singular, presence in the corner of the retail industry it helped create.
In more than two decades since its first standalone retail location opened in Vancouver, Lululemon has grown into a global athleisure behemoth.Fred Lum/The Globe and Mail
In short, Lululemon isn’t going anywhere.
“We’ve got a strong balance sheet, high cash flow and a very engaged consumer base,” says Meghan Frank, Lululemon’s CFO and interim co-CEO (along with president and chief commercial officer André Maestrini). “It’s the case that our growth has slowed relative to where it’s been. And we believe we still have a lot of opportunity in front of us to get back on track.”
But its new leader will be faced with shaping the future of a brand that has become a bit stretched out.
Bree Stanlake can remember standing in a Lululemon store in the early days, watching two women fight over a shirt. “Like, ‘I had it,’ ‘No it’s mine’—fighting, hanging on to the hanger, grabbing it,” Stanlake recalls, laughing. “The craziest thing.”
It was a size eight Whisper Tank in dusty rose, the last one on the rack. And for Stanlake, a former Lululemon executive who spent nearly a decade at the retailer, starting in 2003, it was also a symbol of everything that was going right. “Lululemon was wild in those days,” she says.
When Chip Wilson took his first yoga class in 1997, he discovered a discipline that blended physical wellness with spirituality. He also saw dollar signs. Affluent, fit women, he realized, lacked workout clothing that looked good enough to wear outside the gym. He launched Lululemon the following year and opened its first standalone store in Vancouver in 2000.
Lululemon founder Chip Wilson stepped down as chair after making controversial comments and taking the company to task in public. Though no longer on Lululemon’s board, he remains one of its biggest shareholders.DARRYL DYCK/The Canadian Press
In those days, the company wasn’t only creating a category but had “a real focus on product quality,” Stanlake says, making design decisions based on weekly feedback sessions with athletes, including yoga instructors and runners. It built the brand through viral stunts, word of mouth and cheeky ads—advertising the gussets in its leggings, for example, with the slogan, “Say no to camel toe.”
“I don’t think anybody who was there in the early days thinks it can go back to what it was,” Stanlake says, reflecting on Lululemon’s size and scope today. But she also believes Lululemon needs to be revitalized.
“Their books are fine; they just lost the cool,” says another former executive, who worked at the company prior to the pandemic. (Report on Business agreed not to name them because they were not authorized to speak about internal matters.) For years, Lululemon was a magnet for talented designers, who were empowered to lead product decisions.
Calvin McDonald became Lululemon's CEO in 2018, leading the company through a period of growth. He stepped down in stepped down from the role in January, 2026.DARRYL DYCK/The Canadian Press
Just prior to the arrival of CEO Calvin McDonald in 2018, however, there was a shift in the reporting structure, says the former exec, with merchandising leaders holding more decision-making power. A move like that can put emphasis on what’s worked in the past, rather than risking the launch of new styles that may not take off. “You become kind of a lookalike brand,” the exec says of Lululemon’s shifting image. “Right now, everything is very basic. It’s very safe.”
While McDonald’s tenure was characterized by massive growth—including building Lululemon’s male customer base and expanding significantly in China—there were missteps. The acquisition of Mirror, a device for streaming online fitness classes at home, cost the company $500 million in 2020 and was written off within just a couple of years.
Meanwhile, its core products were losing steam, and the company was losing talent. Chief product officer Sun Choe left Lululemon in the spring of 2024, and later that summer, McDonald publicly acknowledged that its women’s apparel was suffering from “reduced newness.”
Formerly loyal customers, seeing nothing exciting to buy, voted with their feet, and North American sales sagged. Lululemon’s status as a stock-market darling took a shocking hit, with the share price falling by roughly 50% in the past year, as of early May.
“For many years, they had very strong growth rates, which attracted a lot of momentum investors,” says Morningstar analyst David Swartz, who considered the height of the exuberance irrational. But he also believes the correction has been too negative. After all, Lululemon’s business is healthy, but it’s also mature. “The company can’t necessarily have hyperbolic growth forever.”
Its founder disagrees. Last October, after watching the value of his Lululemon stock badly erode, on paper erasing hundreds of millions of his own net worth, the never-shy Wilson decided to speak out.
Wilson—who is no longer on Lululemon’s board but remains one of its biggest shareholders—took out a full-page ad in The Wall Street Journal to excoriate the company’s leaders and its board, saying Lululemon’s decline had been like a “plane crash” and that the brand was at risk of a “slow death.” He decried “finance-focused” leaders who were not experts in product or design.
Under increasing pressure, in December the company announced McDonald’s departure. Shortly after, it was revealed that one of the world’s largest activist funds, Elliott, had taken a US$1-billion-plus stake in Lululemon. The fund began pushing for change, including advocating for a say in choosing Lulu’s new CEO.
Wilson, meanwhile, launched a proxy battle to overhaul the board, saying the directors couldn’t be trusted to pick a new leader. (They picked one anyway, announcing the hiring of O’Neill in April.)
Heidi O'Neill, former Nike executive, is set to step into the CEO role later this year. The announcement of her appointment sent Lululemon's stock tumbling 13% the following day.HO/The Canadian Press
The conflict is set to come to a head at the upcoming annual general meeting. Lululemon is seeking shareholder approval to add its choice of new directors: former Levi Strauss executive Chip Bergh, ex-Unilever exec Esi Eggleston Bracey and former Gap CFO Teri List. Wilson, meanwhile, has put forward his own slate: Marc Maurer, a former co-CEO of trendy shoe company On Holding; ESPN’s former chief marketing officer Laura Gentile; and former Activision CEO Eric Hirshberg. [Update: On May 27, after Report on Business magazine went to press, Lululemon announced that in exchange for Wilson dropping his attacks, it would accept two of his nominees, Gentile and Maurer, pending shareholder approval.]
“I genuinely believe Lululemon can be fixed, but without the right change made to the Board, further value destruction is inevitable,” Wilson wrote in an open letter to shareholders in late April. He followed up with another salvo in early May, writing that the company’s leaders had been “deprioritizing creative excellence at the altar of efficiency.”
The company has recommended shareholders vote against his proposal.
Amid all the sturm und drang, and as they await the arrival of a new leader and the articulation of her longer-term turnaround strategy, Lululemon’s interim co-CEOs have been at work on an “action plan” for 2026. It includes introducing more new styles, cutting back on markdowns and shortening the time it takes to launch new products. The plan also involves refreshing its stores and website, increasing social media spending to woo customers, and finding “efficiencies” in the supply chain to offset the hit from tariffs that’s affected Lulu-lemon and other apparel makers that outsource their manufacturing.
“These are all things that are enduring and, I think, set the stage for Heidi to come in and build on top of what’s already existing. So that’s how I’m viewing it,” says interim co-CEO Frank. “Definitely not sitting back during this interim period. We’re keeping the team focused, in action, and executing the plan that we have positioned.”
Anyone who believes Lululemon is going up in flames clearly doesn’t have children enrolled in dance classes.
“The Studio Pants are one of the things she felt she needed to have,” says Joanne Baird of her 15-year-old daughter Leah. Leah takes classes five to six days a week at a studio in St. John’s, frequently wearing the mid-rise drawstring joggers. They also go with her to school and just about everywhere else, Baird says. “When I was in high school, if I wore jogging pants to school, you would have been, like, ostracized. But now that’s all they wear, sportswear.”
This is the house that Lululemon built—or at least laid the foundations for. The global sportswear market was worth US$419 billion last year, according to research firm Euromonitor, up from US$267.4 billion a decade prior. While the total clothing retail market in North America grew by just 0.6% last year, activewear sales grew by 2.7%, according to data from Circana.
It’s not just Leah’s cohort: At dance studios across Canada, those pants are a staple. And they’re not the only places where Lulu remains strong.
“My older students are coming in, swagged-out and bougie in Lulu-lemon,” says Spring Lambrakos, a teacher at The Yoga Studio of Calgary. But unusually in fashion, that popularity among an older demographic hasn’t repelled her younger students, who also regularly wear the brand. “Pricing is a bit tough on some of them, but they’re finding it at consignment stores.” Lambrakos estimates 90% of her own activewear wardrobe is Lululemon—she hasn’t found another brand of the same quality.
What is true, however, is that the once-cultish look of hordes of women decked head to toe in Lulu has fallen away. Wardrobes have become more varied, as a number of brands spotted the lucrative market Lululemon created and decided they wanted a piece of it.
Shoppers browse at an Aritzia store in Toronto. TNA, the sportswear line owned by Aritzia, is an increasingly popular option in the athleisure market.Carlos Osorio/The Globe and Mail
In St. John’s, for example, Leah’s friends increasingly gravitate to TNA, the sportswear line owned by Aritzia. That other Vancouver retailer is just one among a panoply of Lululemon’s competitors, which include Alo, Vuori, Form, Gymshark, Sweaty Betty (acquired by Wolverine World Wide for US$410 million in 2021), Beyond Yoga (acquired by Levi Strauss the same year), and Left on Friday, started by former Lululemon employees that began in swimwear and has branched out to activewear.
And that’s not even mentioning the scores of dupe brands sold on Amazon and in discount stores. (Last June, Lululemon sued Costco for selling alleged knockoffs, which the discounter denied. They settled part of the lawsuit in March.) Nor does it account for the smaller, niche brands that are winning away cool-girl shoppers looking for something different than mall brands.
“Our girl, there are more times where she’s walking around in SoHo in New York, or she’s walking on Melrose or Abbot Kinney in California,” says Hyla Nayeri, co-founder of Toronto-based athleisure brand 437. “She’s probably grabbing a matcha in her workout set. She’s going to an expensive Pilates class.”
437 launched in 2016 with the goal of selling feminine and fashion-forward activewear to that customer, Nayeri says. Compared to Lululemon, it’s a minnow—with a team of just 14 or 15, and sales in the tens of millions of dollars, compared to Lulu’s billions—but it exemplifies the upstarts that are challenging its status as a trendsetter, winning over influencers like Kylie and Kendall Jenner, Bella Hadid and Megan Thee Stallion.
Across the fashion industry, the barriers to entry are coming down, Stefan Larsson, CEO of Calvin Klein parent company PVH Corp., said at the annual Goldman Sachs Retailing Conference last September: “Anybody can start a fashion brand.”
And Lululemon isn’t alone in feeling the competitive heat. Athleta has reported that its comparable sales—an important metric that tracks sales growth not tied to new store openings—fell by 9% last year. By comparison, Lululemon’s comparable sales in the Americas fell by 3% in its 2025 fiscal year. Nike, where Lulu’s incoming CEO spent 26 years and which is working on its own turnaround, last year partnered with Skims, Kim Kardashian’s shapewear brand. The collaboration on a new womenswear line could be interpreted as an admission that Nike struggled to woo athleisure customers on its own.
“It’s not a situation where Lulu is permanently having to lower prices to generate sales,” says Morningstar’s Swartz—a vicious cycle in fashion that can turn into a death spiral for some brands. “I still think that when Lululemon comes out with new stuff, people will be willing to pay for it.”
Though Lululemon is growing internationally, with operations in more than 30 countries, sales have slipped in North America, its biggest market.Justin Poulsen/The Globe and Mail
The elder millennial writing these words can’t emphasize how dispiriting it is to report this, but capri leggings are coming back.
Erin Ward-Williams, the founder of Schomberg, Ont.-based athleisure brand Azur Fit, wasn’t sure she could get behind it, either. But when her best friend told her she needed to make capris to stay relevant, she took a pair of scissors to her leggings, realized she didn’t hate it and ordered a batch from her overseas supplier. Time from conversation to product in stock: about five weeks. “I feel like we can just move faster on trends, and listen to our customers, and give them what they want faster than a really big brand could,” says Ward-Williams.
Lululemon has been trying to change that. A major focus of its plan is not only to make more new items (which now account for roughly 35% of Lululemon’s products, compared to the low 20s last year) but also to speed up the time it takes to develop new styles.
That’s badly needed, according to Darrell Kopke, who was the sixth employee to join Lululemon in 2001 and spent seven years there, including as its first general manager. He believes Lululemon as it exists now is big, but not bold. “They’re playing defence, and they’re generic,” he says. “They became the Gap.”
“Look, the company’s doing great, so let’s not over-sensationalize,” he adds. “The problem is the dilution of the brand.”
Lululemon has been addressing this, paring back on some products that strayed from its core strengths, Frank says. It recently stopped selling some smaller accessories and tweaked its colour palette. “We did some course correcting in terms of our assortment this year,” she says. The first new products developed under creative director Jonathan Cheung, who joined in early 2024, also started to hit shelves in the first quarter. “The positioning is not to follow trends,” Frank says. “The positioning is to continue to look to lead.”
Despite a series of setbacks in recent years, Lululemon retains a significant presence in the athleisure retail industry it helped create.Laura Proctor/The Canadian Press
But there’s refreshing the product, and then there’s refreshing perception. Lululemon still invests in fabric development and quality, still hosts events at its stores, has revived its popular SeaWheeze half-marathon event in Vancouver—but fashion is as much about telling a story as anything. “Some of the smaller brands are pouring their heart into it,” Ward-Williams says, with the savviest building a following on social media and through word of mouth. “Not just activewear, but any kind of consumer brand these days, if they’re not connecting like that, it might be difficult to gain an audience’s trust.”
In a way, Ward-Williams learned that lesson from Lululemon itself. Before launching Azur, she owned her own yoga studio and was a Lululemon ambassador—a marketing tactic pioneered in the brand’s earliest days, to do grassroots promotion through the most passionate athletes in their own communities. Ward-Williams still remembers the thrill of leading a yoga class at a Lululemon store and having her picture on the wall. Now, Azur hosts its own in-store sessions.
Recently, a customer pointed out to her that the Lululemon location in the same shopping complex in Toronto was hosting a yoga class. “They copied you,” the concerned party told Ward-Williams.
“I was like, no, they didn’t copy me,” she says. “They started that.”