Lululemon is actively undergoing 2 Activist plays/Proxy wars from their founder and a legendary hedge fun. Today we’re piling in to turn this biz around + stop the fighting.

+ Coco’s Q1 update.

Q1 2026 was a killer quarter for at Coco AI (7-fig ARR). Jan - Mar is always a brutal time in the eCom vendor space as everyone makes changes coming out of Q1 + in France Jan is just as big a promo period as

Wins to celebrate: 

What didn't work: 

The most important number in our Q1:

From our 2025 holiday peak → March ARR only compressed -22%. 

For our model, at our stage, in our industry, that's exceptional retention. LTVs up +319% because the clients who stay, stay longer + spend more. The compounding floor keeps rising. 

Good start as we 2x in ‘26.

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here 😉.

Lululemon (the reason everyone you know is wearing yoga pants) is collapsing from within.

Slowing growth, compressing margins and no clear leadership has caused Chip Wilson (the Founder) + Elliott Management (Legendary Activist Fund) to start 2 different proxy wars with the board.

This darling consumer brand is reeling and at the inflection point where it will save itself or get eaten from within then beat by competitors.

FY 2025 Financial Statements (YoY Comparison)

Rev: $11.1B (+5%) 😟

Gross Profit: $6.3B (0%) 👎

OPEX: $4.1B (+9%) 👎👎

Net Income: $1.6B (-9%) 😬

FCF: $922M (-42%) 😰

Cash: $1.8B | Debt: $0 👍👍

Link to Lululemon FY2025 earnings

TLDR Analysis: Anemic Growth

Thank god they have ~$2B in cash w/ no debt. This can turnaround or get very ugly from here.

It’s not an accident 2 separate activists are launching proxy wars at the same time.

Founded: 

Aha Moment: 

Growth:

Model: 

The Stall: 

Here are the 3 ways we’re backing this proxy war to restore Lululemon as one of the top brands in the space.

Lululemon has 2 activists, a board under siege, and interim co-CEOs running a $20B company. God I love this.

Both are right, but they need to work together to get this done.

The move is simple: consolidate efforts to force the board to pick the CEO they both want.

The template already exists. In 2017, Abercrombie & Fitch was a cultural punchline. Stock was down 90% from peak. Product was a disaster. The brand was synonymous with exclusivity, shirtless models, and teenagers who had aged out. Sound familiar?

Fran Horowitz took over. She threw out the playbook. Put customers back at the center. Repositioned the brand to follow the customer who had grown up -- not the teenager they used to target

The result: ANF went from $3.5B → $4.95B in revenue. Operating margin hit 15% -- highest in 15 years. Stock up 800%+ since she took over.

Lululemon's situation is so similar it’s scary.

Jane Nielsen fits the mold. She ran Ralph Lauren's financials through their DTC-led premium repositioning, a $7B brand rebuilt around the same affluent lifestyle customer LULU already has.

Let’s solve the Proxy Wars

The Activist plays are the right move here. The brand shifted too far. But this needs to be handled quickly before it turns into a Civil War.

Takeaway: The bean counters can’t run a $20B (should be $40B) Fashion brand.

Lululemon is spending more money to acquire Gen Z (the generation with the least household income HHI) while their most valuable customer (also their core) ages into her peak earning years with no one talking to her.

All these Athleisure brands chase Gen Z customers. But Gen X/Boomers have all the $$$.

Gen X currently has the highest disposable household income of any generation. The 45-60 woman controls more discretionary income than any other demographic in the American economy.

And LULU is pouring marketing dollars into Gen Z who spend 55.9% LESS than Millennials/Gen X .

Alo Yoga ($10B) and Vuori ($5.5B) are bare knuckle boxing to be the cool for Gen Z customers.

The insane strategy is LULU is torching ad $$$ to convince younger customers their yoga pants are cool. Meanwhile their bag line does ~$1B/yr essentially the same size as Alo.

LULU cannot out-cool either of them with the under-25 customer. That battle is already lost. Keep launching Viral entry point bags to attract Gen Z, but nobody is fighting for the Gen X woman.

The 40+ affluent woman who has been wearing LULU since 2012, whose dual income HHI is $100-150K, kids are old enough that she actually has time to take Pilates 3x/week.

No brand explicitly built for her. She buys LULU by default, but LULU’s brand isn’t built for her.

Pivot marketing to feature + target the 40-something woman at the tennis courts in a LULU skirt.

With this pivot you unlock THE BEST customer in the US economy. The mother/grandmother who invests in Family-lifestyle brands for affluent, active families:

She will spend THOUSANDS on her families clothing purchases. For significantly less marketing investment then the 20 yr old who needs a $100 marketing investment to convince her to buy $128 yoga pants.

Takeaway: Always chase the most valuable segment. Then Charge more.

Men's is $2.6B biz for LULU +66% since 2021. The avg US man has 13% unaided brand awareness LULU even has a men’s line.

87% of its target male customer has never actively sought out LULU and it’s still a $2B biz.

The men’s unit is growing because women are buying men into the brand.

That's the flywheel. The problem is LULU is underinvesting from here.

The man who received the ABC pant as a birthday gift from his wife, loves it and wears it every weekend, but he's not going back to the site or store on his own.

Because the store still feels like his wife's store. The website still leads with women's. The marketing still features women primarily. He doesn't see himself there.

We’re going to give men's its own identity.

Not a completely separate brand, but a distinct sub-brand voice, marketing channel strategy, and retail experience that makes the 30+ year old man feel like this was built for him. How Hims has broken out Hims & Hers.

This is mostly simple marketing. Instead of growing through Yoga & pilates communities bring the same tactics to LinkedIn for the work-to-gym demographic that's the ABC pant's core user.

Then test 5-10 dedicated men's-first retail concepts in major markets. Convert flagship sections where men walk in and the first 60% of the floor is built for them. Test it. Measure conversion. If it works, roll it out (Inter-)nationally.

And close the re-acquisition loop on the gifting flywheel. Most male apparel sales happen around gifting events. Make LULU the must have product men desire to buy. Then empower them to go with their SO’s/wives to buy more.

Takeaway: Break out the tests to become their own winners.

Karma is a B**** but also righteous. 1 of the most obvious markets for Lululemon to accelerate it’s growth in while NA + China decelerate is Japan. But Japan is an absolute no go market for them.

At least for as long as the founder Chip Wilson is alive.

As NA and China’s growth decelerates one of the most obvious and valuable markets to expand into next is Japan (3rd largest economy in the world).

Japan should be a slam dunk for LULU:

Wealthy, fitness-obsessed, fashion-premium culture that already pays $200 for Uniqlo cashmere, w/ high Yoga & Pilates penetration.

Japanese consumers index extremely high on quality signaling and brand pedigree, exactly LULU's lane. Disposable income per capita in Tokyo rivals NYC.

But because the founder named the company to mock Japanese speakers they will never win in this market.

He thought it would be funny to have 3 Ls in the name which would cause Japanese people to have trouble pronouncing the name. This isn’t a joke. He talked about it in his memoir.

Now when the biz desperately needs growth markets and to re-accelerate sales, their top potential market is closed off because the whole country hate this biz.

When building a brand it’s always important to have winners & losers, heroes & villains. Just make sure you don’t shoot yourself in the foot over dumb side jokes that torch entire markets.