New Lululemon CEO faces compounding pressures as she takes over top job
Lululemon is facing significant financial pressure as incoming CEO Heidi O'Neill takes over amid declining North American sales and lowered financial forecasts. The company's stock has hit an eight-year low as analysts express concern over the brand's turnaround strategy.
Why it matters
The struggle of a major retail brand highlights broader economic concerns regarding consumer spending and the challenges of maintaining growth in the competitive activewear market.
A Toronto Lululemon store this May. The retailer's sales have been slipping in North America, its biggest market. Sammy Kogan/The Globe and Mail
Long-time Nike Inc. NKE-N veteran Heidi O’Neill is set to take the helm as CEO of Lululemon Athletica Inc. LULU-Q on Tuesday but faces an embattled activewear retailer that is in worse shape than when she agreed to take the job last spring.
Investors in Lululemon sent the stock to an eight-year low on Friday, after worse-than-expected second-quarter earnings and another cut to its financial forecasts added to fears about the company’s turnaround prospects – and compounded the pressures on its incoming chief executive officer.
On Thursday, after markets closed, the Vancouver-based apparel maker lowered its forecasts for the second time in just three months, and reported that its second-quarter revenue fell by 5 per cent on a constant currency basis, to US$2.4-billion.
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