Project Lotus: How Chip Wilson and Elliott Management could take Lululemon private, and why the most expensive yoga pants in history might need to disappear from Wall Street to find their soul again
Lululemon's board just named Heidi O'Neill, a 28-year Nike veteran who most recently served as President of Consumer, Product, and Brand, as the company's next CEO. O'Neill held that role during what may be the most value-destructive stretch in Nike's history, overseeing the disastrous pivot away from wholesale, a product pipeline that leaned too heavily on legacy franchises, and a period of widespread criticism that the brand had stopped innovating. When new Nike CEO Elliott Hill took over, he made reversing those decisions a priority and split O'Neill's role into three separate positions as part of a sweeping leadership restructuring. Lululemon's stock dropped more than 12% on the announcement. For a company already deep in a cycle of strategic missteps, this hire should raise serious questions about the board's judgment. Here is the track record that preceded it:
1. The Mirror Acquisition (2020, fallout through 2023) Lululemon spent roughly $500 million on connected-fitness platform Mirror during the peak of the pandemic, when at-home fitness was booming. The bet fell apart quickly as gym-goers returned to in-person workouts. By Q4 2022, the company took a $442.7 million post-tax impairment charge, effectively writing off almost the entire investment. Founder Chip Wilson later singled out the deal as a prime example of the board’s poor judgment. By the end of 2021, Lululemon had already slashed Mirror’s revenue outlook by half, projecting $125-130 million instead of the original $250-275 million forecast.
2. The Breezethrough Leggings Disaster (July 2024) Lululemon pulled its $98 Breezethrough leggings from its website and app after customers flooded social media with complaints about an unflattering V-shaped back seam. The seam ran from the seat all the way up to the lower back, and customers described it as creating a “whale tail” look. The product was scrapped just weeks after launch, raising serious questions about whether the company’s design and quality testing processes had broken down.
3. The “Get Low” Collection Fiasco (January 2026) Only 17 months after Breezethrough, Lululemon launched the “Get Low” workout line, which was immediately criticized by customers as see-through, lacking compression, and poorly designed. The company pulled the collection from its U.S. website within days of release. When Lululemon re-listed the products, it told customers to size up and wear skin-tone seamless underwear underneath. Founder Chip Wilson called the pullback “clearly a total operational failure” and said the company had “completely lost its way as a leader in technical apparel.”
4. The Disney Collaboration Lululemon launched a collaboration with Walt Disney Co. (where CEO McDonald sat on the board), which was widely mocked on social media as “a random collab” and “basic AF.” Wilson later claimed the Disney deal, along with other missteps, contributed to the destruction of $10 billion in market cap. The partnership confused brand loyalists who associated Lululemon with serious athletic performance, not character-branded leisurewear.
5. The Team Canada Olympic Uniforms (Summer 2024) Lululemon designed Team Canada’s kit for the 2024 Paris Olympics, and the uniforms drew widespread backlash, with critics comparing the red-dotted pattern to blood stains and uncooked bacon. While marketing experts argued the controversy would not hurt sales long-term, the reputational hit added to a growing narrative that Lululemon’s design sense was adrift.
6. Stale Product Assortment and Over-Reliance on Legacy Styles CEO McDonald himself admitted in September 2024 that the brand had “become too predictable within our casual offerings” and that seasonal colors were not performing as expected. The company acknowledged that letting product life cycles run too long contributed to softness in the U.S. business, with newness penetration sitting at just 23% of the overall assortment when it needed to be at 35%. This staleness opened the door for competitors like Alo Yoga, Vuori, and SET Active to chip away at Lululemon’s core customer base.
7. The Velvet Product Line Lululemon introduced velvet and crushed velvet versions of its core products starting around 2019-2020, including the Wunder Lounge tights and Warm Down crews. A “We Made Too Much” velvet section on the website suggests that inventory of these items did not sell through as planned. The velvet push represented a broader pattern of chasing lifestyle/fashion trends rather than doubling down on the technical athletic fabrics the brand was known for. As analysts and Wilson have noted, this kind of category drift diluted Lululemon’s identity and made it harder for loyal customers to understand what the brand stood for.
8. Loss of Chief Design Officer Sun Choe (2024) The departure of Design Director Sun Choe in 2024 left the brand without a clear creative leader at a time when product quality and design innovation were already under fire. Multiple commentators have pointed to this loss as a turning point that accelerated the brand’s design struggles and contributed to failures like Breezethrough and Get Low.
Taken together, these decisions reflect a company that drifted from its technical athletic roots, struggled with product quality control, chased pandemic-era trends, and diluted its brand identity through off-strategy partnerships. The brand’s core identity has been diluted by inconsistent design and expansion into non-core categories, resulting in alienation of loyal customers, mounting competitive pressures, and a business in clear decline.
What can be done? Let’s take a look…
