I realize some of you don’t love my business posts/analysis. So if that’s you, skip this one! Not your thing, I get it. I like thinking about it and writing about it so here’s my take on the new Lululemon CEO and why the choice isn’t going well so far, before she’s even started.
On April 22, 2026, Lululemon named Heidi O’Neill as its next CEO. O’Neill is a 25+ year Nike veteran. She most recently served as president of consumer, product, and brand. She will join Lululemon as CEO on September 8.
The announcement framed her as a “proven brand builder” with deep experience in product innovation and global strategy. In reality, it was a telling choice for a company already in trouble — and the market responded accordingly.
Side bar:
I should note, while I have never met Heidi in person I have talked with her on the phone several times and we know a lot of the same people. I like her, from the little I know.
We have a similar beginning to our careers and we discussed this. She worked at FCB, an ad agency, in the early stages of her career — I started there as well, a few years after her. She then worked at Levi’s leading marketing for the Dockers brand between 1994-1998, while I was starting out at FCB. I also led marketing for the Dockers brand, but about 11 years after she did.
O’Neill then left for Nike and spent 26 years there — in marketing roles, then rising to President of Consumer, Product and Brand. Again, I had a similar trajectory, but at Levi’s — I spent 23 years at Levi’s, starting in marketing roles and rising to Brand President.
In the summer of 2020, she reached out to me about an ill defined role at Nike. They were looking to add more women to their leadership level. So yeah, I was called as a DEI potential hire. But I had proven myself and had qualifications, so there’s that. I’d been in the CMO role at Levi’s for 8 years, successfully taken the brand public and I was ready for a change. I was frustrated. I’d proven myself again and again, and was stuck in the same role. Heidi and I spoke several times in July and August 2020 before I took myself out of the process because I got promoted to Brand President (announced in October 2020) at Levi’s.
This has nothing to do with anything other than I’ve talked to Heidi, I liked her, we have many mutuals and I’ve got no beef with her. But I question this choice for Lulu.
More on that . . .
Lululemon has been struggling. Its stock has fallen about 50 percent over the past year amid slowing U.S. sales, increasing competition and questions about product relevance and innovation. They could simply be a victim of their own success, as ubiquity is not cool. New phase, new challenge.
Incoming leadership at a troubled company usually sparks a relief rally. It’s as if the market says (usually): any change will be better than what we have. Instead, Lululemon shares dropped sharply — down 12 to 13 percent following the news of O’Neill taking over — hitting levels not seen since 2020. Investors didn’t buy the narrative being touted. They saw the hire as bringing in the architect of many of Nike’s recent missteps yet expecting different results.
O’Neill played a central role in Nike’s aggressive turn toward direct-to-consumer (DTC) sales and away from traditional wholesale partnerships. This is considered a key reason for Nike’s slowing sales and falling stock price. I agree with this assessment. It seemed smart, it seemed to make sense, but it had terrible results.
In the last 5 years Nike stock price has dropped 60-70%, depending on the day.
Under the “Consumer Direct Offense” strategy, Nike pulled out of wholesale partnerships like Macy’s, DSW, Foot Locker and others in order to prioritize its own Nike stores, apps, and website. The goal was higher margins and tighter brand control. The intent was brand elevation, not decline. They projected higher prices, higher margins, more sales. But the outcome was lost shelf space, bloated inventories, reduced access for everyday Americans and declining relevance with core consumers.
Across the country, in second and third tier markets, Americans still shop wholesale, though it is true — that channel has declined as consumers shift to on-line and vertically integrated branded stores like Zara and Uniqlo and for a long while, American Eagle (they are still kind of meh in their performance even with the Sydney Sweeney boost). But still, if you live in Boise, wholesale mall stores like Foot Locker may be the only game in town. Even where I live, in Denver, there is no Nike store — only an outlet. Do Denver-ites not want Nikes? Do they want to cut us out of their full-priced customer base? Pulling out of wholesale reduced our ability to find and buy the brand unless we go on-line and let’s face it, some people don’t want to buy shoes on-line.
Nike was the big wholesale dominant brand that went all in on DTC/retail. And as the big dog — others followed suit. We certainly did at Levi’s, citing Nike as the lead example. Everyone chased the higher margins, higher pricing and brand control. But it’s expensive to build stores and hard to run successful stores. And it is not realistic to have the same huge footprint providing the same broad consumer access that a brand would have with wide ranging wholesale distribution nationwide.
Since Nike’s all-in-on-retail strategy has contributed to the performance tanking, the brand has spent recent years quietly walking much of that strategy back, re-embracing wholesale to recapture distribution/shelf space, accessibility for everyday folks and sales momentum. And they’ve not recaptured it yet. The brand performance is still weak — once you give up that shelf space, that mindshare . . . guess what? Someone else takes it — Hoka, On Running to name a few — and it’s not so easy to get it back.
O’Neill’s fingerprints are all over the original failed plan. It was her baby.
In December 2020, Business of Fashion published the following:
“It was definitely architecting a new retail, and a bold, retail vision for Nike,” said Heidi O’Neill, Nike’s president of consumer and marketplace, and one of the most prominent executives leading the brand’s new strategy in recent years. “But it started with our consumer, and we knew that consumers wanted a more direct relationship with us today.”
Oops. Since then Nike’s stock has gone from $141 in December 2020 to ~$44 in May this year.
Now Lululemon, which built its success on premium product and community rather than pure DTC scale, is handing the keys to the same executive suite that architected Nike’s decline. In fairness, Lulu has always been a DTC brand. They never pursued wholesale as a primary channel. Their wholesale focus has been yoga studios to drive authenticity and credibility, not Misses departments at Kohl’s and Macy’s which I’ve always said is where brands go to die. These departments are kind of depressing, honestly. There’s just something about them. Anyway, Lulu is where Nike tried to get to — all retail all the time. And they have never had to pull back from wholesale or now go back to it as Nike is in the midst of trying to do.
So why is Lulu struggling? Well, here’s what founder Chip Wilson says: the product got lamer, the innovation became non-existent and the whole place is being run by bean counters not cultural and brand building masterminds. To Wilson’s total credit, he created the whole premium athleisure category with Lulu. He’s the reason women consider $100 leggings to be a core staple in their wardrobe and a status-y essential like the right handbag. He created this whole vibe out of thin air. And it remains still, after decades, the fastest growing category in apparel markets. So he has some credibility when talking about cultural genius and how to create brands that intersect with culture in a powerful way.
In an open letter to shareholders issued shortly after the announcement, Wilson — already engaged in a proxy fight — called the O’Neill hire further evidence of “broken governance.”
Wilson urged investors to support his three independent director nominees (former On Running co-CEO Marc Maurer, former ESPN CMO Laura Gentile and ex-Activision CEO Eric Hirshberg) at the upcoming annual meeting.
Wilson has long argued that the current board lacks the product and innovation expertise required to restore Lululemon’s cultural edge. He dismissed recent board appointments as swapping one “Proctor & Gamble bean counter” for another.
“Lululemon is not a toothpaste brand,” Wilson wrote. “Exiting one Proctor and Gamble bean counter on the Board for another will not fix Lululemon’s decline.” The reference to Proctor and Gamble “bean counters” clearly referred to the March board appointment of Chip Bergh, former Levi’s CEO and P&G veteran of more than 2 decades. In Wilson’s view, the board is filled with financial operators who understand spreadsheets but not the “zeitgeist or style of the moment” that drives premium athletic apparel and brand building.
Wilson’s critique lands because it highlights a deeper problem in corporate America’s executive class. Heidi O’Neill wasn’t chosen because she’s the best possible candidate to revive Lululemon’s innovation engine. She was chosen because she has the pedigree — Nike, followed by board seats at places like Spotify and Hyatt. She checked the right boxes in the closed-loop system that governs most Fortune 500 succession planning. Executives from the same handful of blue-chip consumer companies (Nike, P&G, Unilever) rotate through C-suites and boardrooms, handing one another appointments regardless of results. Weakened performance over a decade of DTC overreach and brand erosion at Nike? Irrelevant. What matters is membership in the club and willingness to follow the script.
This self-referential network decides who is “worthy.” Boards staffed by fellow club members anoint the next CEO; the new CEO then populates more boards with club peers. Outsiders who actually build from first principles are viewed with suspicion precisely because they operate outside the loop and succeed on merit rather than I’ll scratch your back, you scratch mine. The result is a self-perpetuating mediocrity machine.
Lululemon’s stock price is now reflecting that reality in real time. Whether O’Neill can break the pattern or simply imports Nike’s failed playbook remains to be seen.
I love these takes on business, especially when the brands are household names and you have such an insider’s take.
Totally agree about the misses dept at Kohls and Macys being depressing. I don’t know what it is!
Lululemon’s stores used to be cool. They would host yoga classes on Saturday mornings. The salespeople looked like they actually worked out in the clothes. They hosted running clubs. Now they’re just another mall store with mannequins that are not aspirational. I’m all for celebrating healthy bodies of all sizes, but for the price I’m paying for Lulu, I want to look better than I am.
I enjoy your corporate posts and this was a good one. I’ve seen companies do poorly with a bean counter CEO not because they were too much of a bean counter. They suddenly decided to spend like a crazy person on a stupid strategy. Their bean counter common sense fled the coop and it was a costly mistake. I’ve seen brand people unable to understand business essentials. It’s tough to find the right mix for sure.