Century City, California- A view of the Fabletics location at Westfield Century City
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Lululemon once was the undisputed consumer favorite in the rapidly growing athleisurewear market. Sporting the Lululemon logo became a status symbol, owing to its performance attributes, fashion-forward styling and premium pricing—leggings start at about $100. But recently it’s been caught in what investment analyst HSBC called a “downward spiral” after repeated product quality issues and being caught behind emerging style trends.
Lululemon’s failings have allowed faster-moving competitors to take market share. While Lululemon still holds a commanding market share lead—it should end the year with $11 billion in revenues—premium brands like Vuori and Alo Yoga have been closing the gap.
And in these days when 80% of consumers face an affordability crisis and casual comfort is non-negotiable, the popularly priced Fabletics is coming on strong. Over the past three quarters, Fabletics has averaged 15% same-store sales growth. Lululemon, by comparison, has seen same-store sales in the Americas trending down all year, including a 5% drop in the third quarter.
Lululemon’s Troubles Mount
No sooner had Lululemon reported at the ICR Conference that a good holiday season gave it confidence that net revenues and diluted earnings for the fourth quarter would hit the high end of previously reported guidance, when it was slammed with another quality-control crisis—an unwelcomed flashback to the too-sheer leggings debacle in 2013 and a similar one in 2024 when the “Breezethrough” leggings had to be pulled.
Just days ago, after releasing its new “Get Low” leggings line, Lululemon pulled them off the website after receiving complaints that they were see-through and not “squat proof.”
While the collection remains available in stores, a Lululemon spokesperson said, “We have temporarily paused sales online in the market to better understand some initial guest feedback and support with product education.”
This is hardly what Lululemon needs to start the new calendar year or to cap its challenging fiscal 2025 year, which will close at the end of the month. It’s been a year of declining Americas sales, where it generates nearly 70% of revenues.
Beyond the company’s on-going quality control issues, or contributing to them, Lululemon faces a leadership crisis. The resignation of CEO Calvin McDonald announced in December caught the board unawares, giving major investors an opening to push their own agenda. Company founder Chip Wilson is mounting a proxy fight to get his favored candidates on the board in order to guide the CEO replacement process and Elliott Investment Management has put forward former Ralph Lauren executive Jane Nielsen as a replacement.
Whoever gets the CEO call will have to immediately address its quality-control issues. “LULU’s withdrawal of a new legging line underscores ongoing execution issues in its core,” wrote Jefferies in a research update. “For a brand that has historically leaned on technical superiority to justify premium prices, repeated missteps in the core category raises questions about consistency and the strength of LULU’s innovation engine.”
Jefferies also noted that productivity is deteriorating, while margins are pressured and competition is intensifying. “Against this backdrop, brand dilution from inconsistent product execution, excess newness and rising markdowns erode the core.”
Fabletics Is Reaching New Heights
While Lululemon seems to be taking its market dominance for granted, Fabletics is doubling down on the very qualities that originally set Lululemon apart, including advanced technical fabrics and trend-forward design. But it is also amplifying those qualities unique to the brand when it launched in 2013.
Chief among them is its reliance on technology. “Our proprietary tech platform is the heart of everything we do,” co-founder and CEO Adam Goldenberg shared with me at the recent IRC Conference.
Deep Consumer Insights
As one of the earliest digitally native activewear brands, Fabletics built its business around consumer data derived from its distinctive membership model. At first, many saw the model as an Achilles’ heel, but it has since become Fabletic’s signature strength.
Even though membership is free and gives consumers a deep discount off their first purchase, it still is a negative-option plan requiring members to skip out by the 5th of every month to avoid a $59.95 charge, though one’s credit never expires.
But the membership model isn’t holding Fabletics back; quite the opposite. Fabletics is nearing 3 million members. And while Fabletics doesn’t reveal membership retention rates, Goldenberg said that 80% of customers join and that over 90% of company sales come from its members.
Having accumulated all that customer data over the years, Fabletics has an inside track on what products and styles work and which ones don’t to guide further product development. By comparison, Lululemon only introduced a loyalty program in 2022.
Store Expansion And Operations
Customer data also rolls over into store operations—Fabletics operates 120 stores, including six internationally. Store associates can access past purchase history to make product recommendations and further personalize the in-store shopping experience.
Stores have also proven critical to customer acquisition and loyalty. Some 50% of in-store shoppers sign up for membership while in the store.
After opening 20 locations in 2025, Fabletics plans to add 40 new stores this year, evenly split between the U.S. and international markets. Currently, Goldenberg sees 250 stores to be optimal for the brand. That compares with some 770 stores Lululemon operates worldwide, including about 460 in the Americas.
In addition, Fabletics is introducing a next-generation store model with smart fitting rooms and AI-powered systems to support employee coaching, inventory optimization and productivity analytics. The new store model is on full display at its new flagship Century City Mall store in Los Angeles.
To date, ten stores have opened under the “Gen 5” store model and they are delivering 10% to 15% greater operating efficiency. More stores will be converted in time.
Putting Distance From The Athleisurewear Pack
Fabletics expects to cross the $1 billion threshold this year and sees a path to double revenues over the next five years or so. While it still has but a fraction of the $420 billion global athleisurewear market, it is no longer confined to the athleisurewear box.
In 2023, it launched into the medical scrubs business, tapping one of the nation’s fastest growing employment sector. To date, Fabletics scrubs has grown to a $75 million business, expanding nearly 60% year-over-year, with a customer base that seamlessly aligns with its core athleisurewear customer.
Fabletics scrubs customers go on to purchase athleisurewear and vice versa. Before getting into the category, scrubs were the most requested new product from the Fabletics’ membership base.
The new scrubs category has the potential to greatly expand Fabletic’s playing field and increase its repurchase rate, while Lululemon is largely confined in the athleisurewear lane.
“We see our space as active-life and work category, not just athleisurewear anymore,” Goldenberg said. “We’re tapping the casualization trend. People want to be comforate and they want fabrics that stretch and perform in multiple ways—like products you can work out in, play golf in or wear to work. People love the versatility they find with us, so we just see things continuing to build for Fabletics.”
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Source: https://www.forbes.com/sites/pamdanziger/2026/01/21/lululemon-hits-the-wall-while-fabletics-takes-flight/
