Lululemon's new CEO Heidi O'Neill faces mounting challenges as she takes the helm. The athleisure company reported a 12% drop in comparable sales in North America last quarter, with leggings — its core product generating roughly one-third of revenue — plunging 20%. The company's market share fell 10 percentage points to 43.9% in August, whilst competitors Alo and Vuori gained ground. China sales also declined for the second consecutive quarter after years of double-digit growth. O'Neill, formerly Nike's president of consumer, product and brand, inherits problems similar to those at her previous employer: declining innovation and an overextended product range. She told staff the company must return to its roots with "innovative and distinctive" products. Shares have fallen 80% since their 2023 peak, intensifying pressure for quick results.

BMO Capital Markets has initiated coverage of Lululemon Athletica with an Underperform rating and a $70 price target, suggesting roughly 28% downside. Analyst Kelly Crago cites the athletic-wear retailer's loss of market relevance, intensifying competition from brands like Alo and Vuori, and declining consumer demand. Lululemon shares have fallen over 80% from their December 2023 peak of $511.29. The company has cut its full-year sales outlook three times, now targeting $10.35 billion versus an original $11.35 billion forecast. Second-quarter store sales dropped 9%. New CEO Heidi O'Neill, formerly of Nike, faces challenges including weak store traffic and softening demand for the company's signature leggings. BMO expects fiscal-2027 earnings per share of $6.35, below Wall Street consensus.

Lululemon is scaling back US store expansion as new CEO Heidi O'Neill takes the helm amid weakening sales. The athleisure retailer now plans to open a net 35 stores in 2026, down from 40, and is cutting 25 pop-up locations from its annual target. North American sales fell 12% and global profit declined 1% to $1.5 billion. The results include roughly $135 million in tariff refunds. Interim co-CEO Meghan Frank said the company is taking a "measured approach", with only a handful of new North American stores planned. About half are pop-up conversions that have demonstrated sufficient productivity. China remains a growth opportunity, whilst North America faces tighter scrutiny. The pullback reflects broader consumer spending weakness, with US retail sales falling 0.6% in July.