Lululemon is at a crossroads. After the abrupt departure of CEO Calvin McDonald in 2025 and the appointment of former Nike executive Heidi O'Neill, the company faces skepticism from investors, analysts, and even its founder. Meanwhile, Gap—a legacy brand that was once in a similar slump—has staged a remarkable comeback. This Q&A explores the challenges Lululemon faces, the lessons it can learn from Gap, and what it will take to regain its footing.
1. What is the current situation at Lululemon following the CEO change?
In late April, Lululemon's board announced it had chosen Heidi O'Neill—a 26-year Nike veteran—as the new CEO, replacing Calvin McDonald, who left abruptly in 2025 after six years. The decision immediately caused the company's stock to drop, signaling that investors were not confident in the choice. Many analysts, including myself, argued that adopting the Nike playbook wouldn't solve Lululemon's financial troubles. The company is searching for a fresh direction after a period of declining sales and brand fatigue, much like Gap experienced before its own turnaround.
2. Why did investors and analysts react negatively to Heidi O'Neill's appointment?
Investors viewed O'Neill as a safe but uninspired choice. Her extensive background at Nike suggested she might replicate strategies that worked for that brand, but critics argued Lululemon needs something different—a disruptive, creative vision rather than a corporate playbook. O'Neill's appointment also came during a challenging time for Lululemon, with fading growth and increased competition. The stock plunge reflected a lack of faith that her experience at Nike, a massive athletic company, would translate to the unique culture and customer base of Lululemon, which started as a yoga brand.
3. What role has founder Chip Wilson played, and what are his criticisms?
Chip Wilson, who founded Lululemon in 1998 and left in 2005, remains the largest shareholder and a vocal presence. He openly opposed McDonald's leadership and criticized the choice of O'Neill, arguing in a LinkedIn post that the board should seek "passionate, creative renegades" to shake up the status quo. Wilson's past statements have stirred controversy—he once blamed pilling on leggings on women's thighs rubbing together (seen as body shaming) and criticized the company's DEI policies for welcoming "customers you don't want coming in." While his views are often problematic, his instincts about brand direction have sometimes been correct.
4. How did Gap achieve its recent turnaround?
Gap's revival is a case study in brand reinvention. After years of declining sales, the company launched hit marketing campaigns featuring stars like Young Miko, Troye Sivan, and Katseye. It also created GapStudio, a high-fashion line under creative director Zac Posen, which placed red-carpet looks on celebrities like Timothée Chalamet and Anne Hathaway. Collaborations with brands like Béis, Dôen, and Victoria Beckham drove buzz. The turnaround required deep brand knowledge and hard work, led by Mark Breitbard, who had previously worked at Old Navy and Banana Republic.
5. What specific strategies did Gap use to revitalize the brand?
Mark Breitbard, Gap Brand's president and CEO, inherited a mess in 2020: too many unprofitable stores and excess inventory leading to heavy discounting. He focused on reducing store count, streamlining inventory, and shifting from discounts to full-price selling. He also revitalized marketing with authentic, trendy campaigns and partnered with designers to create buzzworthy collections. Breitbard's history with Gap (he was chief merchant at Old Navy and Gap earlier in his career) gave him deep insights into the brand's DNA. This combination of operational discipline and creative energy fueled the revival.
6. What lessons can Lululemon learn from Gap's transformation?
Lululemon can learn that a successful turnaround often starts with leadership that deeply understands the brand's heritage. Gap's Breitbard knew the company inside out, which helped him make tough decisions about stores and inventory. Lululemon, however, brought in an outsider from Nike, which may dilute its unique identity. Another lesson is the need for bold, creative marketing and collaborations that excite customers—Gap's partnerships with Victoria Beckham and Katseye were huge hits. Lululemon must also address its pricing and product innovation, as well as heal the rift with its founder and core customers.
7. What challenges does Lululemon face in replicating Gap's success?
Replicating Gap's success won't be easy. Lululemon is a premium brand with a cult following, but it has been criticized for losing its yoga roots and becoming too generic. The company struggles with inventory management and an over-reliance on its core leggings and tops. Unlike Gap, which had a clear turnaround leader with deep internal knowledge, Lululemon's new CEO is an outsider facing skepticism from investors and the founder. Additionally, the athletic apparel market is more competitive now than ever, with rivals like Alo Yoga and Vuori gaining traction. Lululemon must find a way to innovate without alienating its loyal fanbase.