When Heidi O’Neill takes the reins of

Lululemon Athletica Inc.

on Sept. 8, she will be tasked with reviving the Vancouver-based retailer’s growth while appeasing a discontented and outspoken group of shareholders who will likely be watching her every move.

Here, the Financial Post looks at the incoming CEO’s long career with one of Lululemon’s rivals, what the market thinks of her

hiring

and how the change at the top will affect the

company’s ongoing proxy war

with its founder.

Who is Heidi O’Neill?

Lululemon drafted its new CEO from a competing team. O’Neill spent more than 25 years at

Nike Inc.

, most recently serving as president, consumer, product and brand before leaving the company last September.

O’Neill has “more than three decades of experience across performance apparel, footwear, and sport,” Lululemon said in a press release.

Before landing at Nike, O’Neill worked in marketing for the Dockers brand at Levi Strauss & Co. She is also a board director of Hyatt Hotels Corp., Spotify Technology S.A. and automotive dealership group Lithia Motors, Inc.

While O’Neill is a retail industry veteran, she flew under the radar as a potential candidate to replace former chief executive Calvin McDonald, who stepped down in January.

The decision to appoint O’Neill continues Lululemon’s tradition of “out-of-left-field CEO picks,” William Blair & Co. analyst Sharon Zackfia said in a note. She said “O’Neill was not a name bandied around on Wall Street given no prior public company CEO experience.”

However, Zackfia said O’Neill brings a “significant breadth of knowledge” in women’s performance apparel.

“Her experience accelerating speed-to-market is particularly welcome at Lululemon where lead times have ballooned to about 24 months (eroding much of the brand’s historical competitive advantage of adding beauty to function via short lead times),” Zackfia said.

Why did Lululemon choose O’Neill?

During her time at Nike, O’Neill covered a lot of professional ground, working variously in “product creation and design, brand strategy, marketing, digital commerce and global market operations,” Lululemon said in a press release.

“We selected Heidi because of the breadth of her experience, her demonstrated success delivering breakthrough ideas and initiatives at scale, and her ability to be a knowledgeable change and growth agent,” said executive chair Marti Morfitt in a statement.

In her most recent role at Nike, Lululemon said O’Neill “reset the brand foundation” and “reduced product development timelines to accelerate speed to market” — two feats that may help the incoming CEO in her new job.

“During her career at Nike, Inc., she helped grow the company from a $9-billion-plus business to a $45-billion-plus global leader,” Lululemon said. “She played a central role in overseeing the company’s product pipeline, brand voice, and operations, as well as in shaping its connection with consumers and athletes worldwide.”

O’Neill said in a statement that Lululemon is an “iconic brand” rooted in customer loyalty and product innovation that is still in the early stages of its global potential.

“As I step into the CEO role in September, my job will be to build on that foundation — to accelerate product breakthroughs, deepen the brand’s cultural relevance, and unlock growth in markets around the world,” she said.

What does Chip Wilson think?

Lululemon’s search for a new CEO has been punctuated by a proxy fight launched by the retailer’s founder,

Chip Wilson

. While Wilson stepped down as CEO in 2005 and left the board in 2015, he remains the company’s largest individual shareholder and has criticized its leadership for both a loss of strategic direction and “loss of cool.”

In December, Wilson launched a campaign to revamp the board’s governance structure and nominated three candidates to serve as independent directors.

O’Neill’s hiring may not fit with Wilson’s plan, as he has previously said Lululemon should overhaul its board before choosing the next CEO. In an open letter to prospective candidates published in March, Wilson said that “until meaningful change in the boardroom has taken place, success for the new CEO could be a perpetual struggle.”

A representative for Wilson did not respond to a request for comment.

O’Neill’s appointment removes “a large portion of the uncertainty” around Lululemon since McDonald announced his forthcoming resignation in December, but also “likely only fans the flames surrounding the activist battle around board composition,” BTIG analyst Janine Stichter said in a note.

The proxy contest is expected to “come to a head” at Lululemon’s annual shareholder meeting (usually held in early June) when investors will vote on Wilson’s nominees and proposed governance changes, Jefferies analyst Randal Konik said in a note.

“We think (Wilson) has a point: to us, the board feels stale and in need of fresh perspectives,” he said.

How are the markets reacting?

Zackfia from William Blair said Lululemon’s share price dropped about five per cent in aftermarket trading following Wednesday’s announcement, “likely reflecting the timing of O’Neill’s expected start date (nearly five months out) and lack of familiarity with O’Neill.”

Nasdaq-listed shares of Lululemon closed 13 per cent lower on Thursday but were trading higher on Friday. Over the last year, Lululemon’s share price has dropped 45 per cent as the retailer struggles with softer North American sales, increased competition and a series of customer complaints about quality.

Stichter said BTIG doesn’t expect the market to view O’Neill’s appointment positively, as Nike faced similar challenges to Lululemon’s “around its product and innovation engine” during her tenure.

She also noted that O’Neill doesn’t start until September, and Lululemon has “notoriously long product lead times.”

“If an earnings reset is needed … we believe investors would like to see this sooner rather than later,” she said. “Given (Lululemon) generates (around) half its revenue from stores, we also believe more experience in brick and mortar retail would have been preferred.”

The key question is whether O’Neill brings the “product muscle (Lululemon) needs to truly reset the brand,” said Konik from Jefferies.

“Under Mr. McDonald, company fundamentals suffered as product diversification into non-core categories diluted the brand and drove customers to the competition — that damage is not easy to undo,” said Konik.

  • What’s behind Chip Wilson’s proxy war with Lululemon
  • Lululemon forecasts weaker 2026 sales, says ‘more work to be done’

• Email: jswitzer@postmedia.com