Lululemon chased footwear and parkas, lost its leggings magic — and shares fell 80%

Lululemon, the athleisure pioneer that grew revenue sixfold between 2013 and 2025 to $11 billion, spent its recent years expanding into footwear, parkas and skirts — logical extensions that dragged it into direct competition with apparel and running-shoe makers with deeper supplier relationships, and took its eye off the technical activewear that made it beloved. Analysts watched the results land through 2026: items that once never discounted ended up in bins, and the company, run by two executives on an interim basis since late January 2026, cut its full-year outlook twice in three months.

The second quarter of 2026 was the reckoning: North America comparable sales fell 12%, China fell for a second straight quarter after double-digit spring growth, and leggings — by some estimates a third of revenue and its highest-margin product — suddenly plunged 20%. 'We did a double take when Lulu called out that leggings were down 20%,' said BNP Paribas' Laurent Vasilescu. Per M Science data cited by Reuters, market share fell 10 points to 43.9% in August, with upstarts Alo and Vuori gaining 5.9 and 2.2 points.

Heidi O'Neill, the ex-Nike president of consumer, product and brand, took over as CEO on September 8, 2026 vowing to 're-establish who we are at our core' — starting with product. Skeptics noted her Nike resume includes the lifestyle expansion and DTC shift that mirrors Lululemon's troubles. Founder Chip Wilson publicly criticized her hiring as likely to continue the board's 'failed' strategy; his non-disparagement deal ends in November 2027.

Category expansion pulled design resources and management attention away from the innovative technical product that was the brand's whole value proposition.

The new categories put Lululemon against specialists, so the goods lacked distinction and migrated to discount bins — unheard of during its premium rise.

The core franchise finally cracked: leggings, the bread-and-butter with the best margins, fell 20% just as Alo and Vuori were harvesting defectors.

Stretching a brand into every category sells volume but spends the equity: when the core product stops astonishing people, the discounts start.

As of September 2026, O'Neill was pruning the assortment and promising fabric and fit innovation, Jefferies warned she had 'a mountain to climb,' and GlobalData blamed 'an incredibly boring assortment' and 'an absence of good technical innovation' for the lost brand heat. Failure to show quick progress could invite activist investors.