China News Service, Beijing, September 11 (Reporter Xie Yiguan) A pair of yoga pants sold for nearly a thousand yuan, and people are still rushing to buy it. Lululemon, a brand that frequently appears in the mouths of high-net-worth people, has been poured cold water on recently: its latest quarterly financial report has seen a decline in global revenue, and 71-year-old founder Chip Wilson was revealed by foreign media to be divorcing his wife.
When performance goes downhill, how long can lululemon’s “myth” of yoga pants last?
Global revenue declines
According to foreign media reports, lululemon founder and Canadian billionaire Chip Wilson is going through divorce procedures with his wife. Public information shows that Chip Wilson founded lululemon in 1998, and the couple married in 2002. Summer Wilson, 52, served as the brand's founding chief designer.
Since the two parties have not signed a prenuptial agreement, once the divorce proceedings evolve into equal division of assets, Chip Wilson's personal wealth, valued at approximately US$6.1 billion, and shares of listed companies worth nearly US$1 billion may enter the division process. Foreign media pointed out that this may have an impact on lululemon's stock price.
Prior to this, lululemon's stock price had experienced a sharp decline.
Recently, lululemon released its second quarter financial report for fiscal year 2026: global revenue fell by 4% year-on-year to approximately US$2.4 billion, and comparable sales fell by 9%. On the first trading day after the financial report was released, its stock price fell by nearly 20%, hitting a new low in more than eight years. It has fallen by about 80% from its historical high in late 2023.
In the past few years, China has been a market that lululemon relies heavily on. From fiscal year 2023 to fiscal year 2025, its mainland China revenue increased by 67.2%, 41.3% and 28.9% respectively. As of the first quarter of fiscal 2026, mainland China has contributed 19% of its global revenue and is the second largest market after the Americas.
However, the financial report shows that in the second quarter of fiscal year 2026, mainland China's revenue growth slowed rapidly to 4%, a decrease of 2% based on fixed U.S. dollar exchange rates; and in the first quarter, this number increased by 30% year-on-year. Comparable sales also turned from an increase to a decrease, falling 8% at constant U.S. dollar exchange rates.
As of August 2, lululemon had a total of 174 directly operated stores in mainland China, a net increase of 15 stores compared with the same period last year. New stores are still contributing incremental revenue, but this increase has been partially offset by the decline in same-store sales - the sense of scarcity of "opening one and becoming popular" is weakening.
Why did lululemon suddenly stop selling?
In this regard, Cheng Weixiong, a senior brand management expert and founder of Shanghai Liangqi Brand Management Co., Ltd., told China News Service that lululemon is facing three pressures: first, the overall rise of the domestic sports and outdoor market, which has a direct impact on lululemon, which specializes in professional yoga and relied on community marketing; second, the rise of local affordable brands within the yoga track has diverted users; third, the performance of new stores is not as good as expected, and the output of single stores has declined year-on-year, dragging down the overall growth rate.
Causing turmoil in the Chinese market
Over the past ten years, lululemon has completed the transition from a relatively niche yoga brand to a high-end sports lifestyle brand in China.
Consumers' awareness of it has also expanded from a pair of yoga pants to women's sports and healthy life. It is along this path that the brand has established a positive cycle of high gross profit, high customer unit price, high repurchase, and high loyalty.
But when the core product loses growth, the cycle begins to break down. Data shows that in the second quarter of fiscal year 2026, as the brand’s most recognizable core product, sales of leggings fell by approximately 20% year-on-year.
During this period, lululemon received constant negative news, which also damaged its brand reputation to a certain extent.
In May this year, lululemon held a yoga carnival at the Great Wall. The drumming performance participated by brand ambassador Zhu Yilong was accused of using drum equipment that was highly similar to Japanese taiko drums, which caused controversy.
Then in June, a large-scale yoga event on the North Bund in Shanghai encountered heavy rain, but the brand did not cancel the event, allowing thousands of people to complete their movements on slippery yoga mats. Netizens compared the scene to the movie "Zhou Chu Eliminates Three Evils", which amplified the problems of organization and planning.
According to media reports, during the earnings conference call, interim co-CEO and CFO Megan Frank admitted that the revenue gap "mainly comes from the mainland Chinese market." She attributed one of the factors to the impact of brand public opinion - at the end of the first quarter and the beginning of the second quarter, negative comments on social media broke out intensively, and the controversy over the Great Wall event further aggravated the damage to brand sentiment.
At the same time, the competitive landscape is being reshaped.
The American brand Alo Yoga, regarded as lululemon's "strong rival", officially entered the Chinese market in August this year. On the first day of sales on Tmall, the turnover exceeded 10 million; Vuori, also from California, has also opened many stores in China; domestic products are constantly grabbing the public customer base.
"While enterprises are expanding rapidly, internal operational capabilities and system construction must keep pace. Otherwise, a small problem or a problem with a certain product may shake the market position." Cheng Weixiong said that the current market is no longer the only one. Lululemon must readjust the Chinese market strategy and cannot simply copy the global strategy to China.
Many senior executives have resigned, and the new coach faces a big test
Facing the dilemma, lululemon has lowered its full-year performance guidance for the second consecutive quarter. It expects revenue in fiscal year 2026 to be 10.35 billion to 10.5 billion US dollars, a year-on-year decrease of 5% to 7%, and the full-year store target has been reduced to 35.
The greater uncertainty comes from management.
Since the departure of former CEO Calvin McDonald in January this year, lululemon has been managed by an interim co-CEO. Recently, many senior core executives have resigned one after another. Since August, lululemon’s global chief communications officer, chief strategy officer, and chief AI and technology officer have resigned one after another.
On September 8, CEO Heidi O'Neill officially took over. She has worked at Nike for more than 25 years, overseeing the company's growth from $9 billion to $45 billion.
The test questions before her were not easy. How to revive the declining core product line? How to maintain brand premium under the siege of new and old competitors such as Alo Yoga and Vuori?
Cheng Weixiong believes that the current sports and outdoor market has entered the stage of stock competition: the popular tracks are becoming homogeneous and competition is intensifying. The mid-to-high-end track returns to the competition between professionalism and functionality, putting forward higher requirements for brand moats. “There are still opportunities for lululemon.”
However, in the face of consumers with more and more choices and increasingly discerning tastes, lululemon has to answer the simplest question after all: why should it be you?
