Lululemon names former Nike exec Heidi O’Neill as new CEO

lululemon On Wednesday, it appointed Heidi O’Neill as the sportswear company’s new CEO, effective September 8.

The news comes after the company has been under disappointing performance for more than a year and has been embroiled in a dramatic proxy battle, with founder Chip Wilson criticizing the business.

The company’s shares lost more than 5% of their value in extended trading.

O’Neill served in many roles at Nike, contributing to the growth of the sportswear giant. He has also held positions at Levi Strauss, Hyatt Hotels and Spotify.

“Heidi is an inspirational leader and proven, consumer-focused brand strategist with the rare ability to both imagine a new future for a brand and create the structures and processes to realize that vision,” Marti Morfitt, Lululemon’s executive chairman, said in a statement. “We selected Heidi for her breadth of experience, success in delivering breakthrough ideas and large-scale initiatives, and ability to be a knowledgeable change and growth agent.”

O’Neill said in a statement that he plans to focus on building the company’s core foundation and paving the way for growth in global markets. O’Neill will start at a base salary of $1.4 million, according to his 8-K filing.

“I am humbled by the opportunity and energized by what the team has already built,” he said in his statement. “I look forward to joining the company and helping define and deliver the organization’s next chapter of success.”

Lululemon has been struggling with weak sales and increased competition, as well as rising costs from tariffs. The retailer said in its latest earnings report that it expects the tariffs to cost the company $380 million this year.

Wilson, Lululemon’s largest shareholder, is also putting increasing public pressure on the company to make changes to its board. He did not immediately respond to a request for comment on the appointment.

GlobalData managing director Neil Saunders said in a statement that O’Neill “has a very strong background in activewear and sports” and “an intimate knowledge of how the industry works”.

“It will be mostly activist investors who see O’Neill as a safe, traditional choice,” Saunders said. “This argument is partially valid, as a lot of cultural change is needed to improve performance at Lululemon. But in our view, O’Neill is the one to come in with an agenda for change.”

While at Nike, O’Neill played a key role in the company’s direct-to-consumer sales strategy, which was doomed to fail; In this strategy, the brand moved away from wholesale partners and towards its own website and stores under former CEO John Donahoe. When current CEO Elliott Hill took over as Nike’s next CEO, he made it a priority to step back from the direct sales plan.

Before leaving Nike, O’Neill also oversaw product and innovation at a time when the brand was lagging behind on new products and facing criticism for focusing too much on the same old lifestyle lines: Dunks, Air Force Ones and Air Jordans. Franchises briefly led to a surge in sales, making Nike a brand worth over $50 billion, but ultimately became ubiquitous in the market and frowned upon by some consumers.

Hill is currently still working on unwinding this strategy and clearing the stock of these franchises in the market; This has hit Nike’s margins and led to a decline in online sales.